British debts and deficits - worse than Greece

[Skybird]

With some surprise I read this week that Great Britain is in an economica and finacial situation that mybe is worse and more threatening than that of currently much discussed Greece. I did not know much, if anything, abiut British economy, and followed the dramatic news about Greece, I know a bit about the basic figures of Japan and America, and I wonder why currently everyone in the Euro-Zone speaks about Greece, while Italy's situation maybe is much more threatening, with Spain and Portugal close on it'S heels, and Iceland, also in a dramatic conditions, wants to contribute to Euroland's misery by now joining the currency.

Our Western nations - are bubble-countries. And the bubbles, one by one, set to burst.

Add this to the growing economic pressure from Asia, collapsing social systems due to misled migration policies, the complex issue of oil, and you should start to feel worried if there still is some sanity and life left in that body of yours. The design of our countries, their financial, social, economic structure, seem to be unfit to survive the storm ahead.

http://www.telegraph.co.uk/finance/f...rld-table.html

Britain has one of the worst deficits as a percentage of GDP in the world, according to OECD figures. Only Iceland and Greece have higher deficits and experts fear it could overtake Greece. Here is a table of how the UK compares with other nations.


Deficit as a % of GDP

Iceland 15.7
Greece 12.7
Britain 12.6
Ireland 12.2
United States 11.2
Spain 9.6
France 8.2
Japan 7.4
Portugal 6.7
Canada 4.8
Australia 4
Germany 3.2


* Figures from OCED forecast in November 2009.

Of Britain's deficit, Ross Walker, chief economist at RBS, said: "What do you expect when you run a deficit even during the boom years."

German paper Die Welt writes that this year analysts expect the kingdom to reach debts equal to 80% of the GDP. that just covers the public sector - if credits and economy are included, Britain'S debt level will be at 460% of the GDP this year. that is the second place behind world record holder Japan with 485% of their GDP. Rating agencies like ING, S&P and BCA now threaten to lower the credit rating of England. But if it loses it's triple-A rating, this will further effect the pound Sterling, which already is under pressure from what analysts of rating agencies see as signs of a stagflation- not as a slow economic recovery. they say the Pound could loose up to 30% of it's current value. which brings a rat-tail of other problems.

It seems to me we are sitting in a ship, and more and more small little holes open in the hull everywhere, and become bigger, and nobody knows how to stop that process. And the command has been given to send the band on deck and let it play.

Get your towels ready. We're going down - and it will be a wet trip.

Meanwhile speculants as well as some governments try to trick the German government into bailing out the Greeks - ignoring the background that this would violate the rules of the stability pact (that'S why some constitution experts already recommended parties and politicians to sue the government at the Constitutional High Court if they try to directly or indirectly give German taxes to Greece) that forbids any such aid as a safety to enforce a minimum stability of the Euro currency. Any such paments are not only illegal by EU treaties (although I admit the EU has a solid record now to break it's own rules if it is opportune), but is money that is payed by Germany increasing it's own debts. Additionally, they alrerady have big strikes in Greece against planned cuts in spendings, and the latest report of Transparency International says that in mean values every Greek last year has payed 1374 euros in briberies to speed up the bureaucratic procedures of the state'S bureaus and services. For doctors, lawyers and and banks, the mean per head "fakelaki" even was higher, with 1671 Euro. Almost 14% of Greeks being asked said that they had been demanded to pay briberies. How many even offer it voluntarily to get what they want or to get it faster, is not known - probbaly more than 14%. 787 million euros in "fakelaki" have been payed in 2008, that is a rise of 23% over the past 2 years.

http://www.transparency.de/Tabellari...ng.1526.0.html

I fear that the financially stronger, a - little - bit healthier nations in Euroland will allow to get pulled won by countries like Greece, Spain, Portugal, Italy in a suicidal attempt to continue selling the euro as a success story. I more and mroe see it as a nother nail in europe's coffin, but maybe I will be thankful for it: if the collpase of the Euro eventually becomes the startinging gun for the collapse of the EU itself.

In any case, we will get wet, this way or the other.

I did not know much, if anything, abiut British economy

Is this the same person who said the policies which led to the creation of the property bubble, the de-regulation and the asset stripping were the great steps which had put Britain on the right road and had cured it of its sick man of europe image?

The design of our countries, their financial, social, economic structure, seem to be unfit to survive the storm ahead.

Does this belong in the "sky is falling" topic?

I fear that the financially stronger, a - little - bit healthier nations in Euroland will allow to get pulled won by countries like Greece, Spain, Portugal, Italy in a suicidal attempt to continue selling the euro as a success story.

Never fear , the muslim horde will have swamped the world before then.

[bookworm_020]

I think the latest figures show that Australia's debt as % of GDP is around 3.5%.

Australia's GDP is rising, so are our intrest rates.

http://www.smh.com.au/business/econo...0303-phhk.html

Now if only our idiots in power could make some useful long term decisions that would benifit the country.

[Schroeder]

Originally Posted by bookworm_020

Now if only our idiots in power could make some useful long term decisions that would benifit the country.

And that is exactly the problem. Those long term decision should have been taken 20 to 30 years ago. Now it is pretty much too late. We are getting strangulated by our interest payments and now any decision made to get us out of this mess is one with major impact on daily live of everyone. That is not going to happen in a democracy because every party/politician is reluctant of doing things that will cost them the next election.... and it would cost them the election because people are stupid and do only think in short terms and start to protest if they have to give a bigger share.
But the bottle is empty. I can only give water to someone if I have a full bottle! It is high time to cut unnecessary costs (whatever this would be) and try to consolidate this mess but we rather stick our head in the sand for the next decade or to and blame everything then on the previous governments.

Those long term decision should have been taken 20 to 30 years ago.

You are still paying for the huge costs Germany gained with re-unification.

I think the latest figures show that Australia's debt as % of GDP is around 3.5%.

Though in this topic Australia mainly avoided the financial meltdown that hit many countries, plus it didn't have the property bubble like those countries.
Though of course Australia is very reliant on the flow of more immigrants to its shores.
Actually that reminds me, who was that woman who was always ranting about immigrants and the Muslim horde taking over Australia?
The imminant threat the country faced led he to decide to not only to leave Australian politics but to leave Australia itself...she chose to move to Britain .....obviously she hasn't read any of skybirds posts about the Muslim horde

[Schroeder]

Originally Posted by Tribesman

You are still paying for the huge costs Germany gained with re-unification.

Yes, I know it was more meant for the west as a whole (though here the tough decision need to be done too, we can't allow the reunion to become our funeral....)

Though in this topic Australia mainly avoided the financial meltdown that hit many countries, plus it didn't have the property bubble like those countries.
Though of course Australia is very reliant on the flow of more immigrants to its shores.

The difference is that Australia doesn't let everybody in.
If I'm informed correctly one must have either some money or a job in Australia to be allowed to stay there. They don't take the uneducated underachievers from other countries. I wonder why we can't introduce the same here.

[bookworm_020]

Originally Posted by Tribesman

Though in this topic Australia mainly avoided the financial meltdown that hit many countries, plus it didn't have the property bubble like those countries.

We did have a large property bubble, but it deflated a couple of years before the GFC. Prices are starting to rise again as there is a general shortage of housing (rentals are almost non existant!)

The difference is that Australia doesn't let everybody in.

Sometimes it doesn't seem like it! I give thanks again and again that Australia doesn't have a land border!

[Skybird]

Originally Posted by Schroeder

And that is exactly the problem. Those long term decision should have been taken 20 to 30 years ago. Now it is pretty much too late. We are getting strangulated by our interest payments and now any decision made to get us out of this mess is one with major impact on daily live of everyone. That is not going to happen in a democracy because every party/politician is reluctant of doing things that will cost them the next election.... and it would cost them the election because people are stupid and do only think in short terms and start to protest if they have to give a bigger share.
But the bottle is empty. I can only give water to someone if I have a full bottle! It is high time to cut unnecessary costs (whatever this would be) and try to consolidate this mess but we rather stick our head in the sand for the next decade or to and blame everything then on the previous governments.

Historians and some economists often say that 13% deficits are the deciding criterion beyond which states can no longer maintain themselves in the medium and long run, and start falling apart (empires), or go bancrupt and break down (nations). That is because interest rates eat them up alive in a process that is feared to be irreversible from that mark on.

I assume there is such a critcal, more individual mark for debts, too. After WWII, Britain had 485% of it'S GDP in debts they write. Now it is 460% again.

And when nations in peacetime let things slide so that they accumulate debts in public and private sector together that are several times as high as the whole yearly GDP, then that is hefty, too. It means that nothing they claim to own they really own at all. It's a bubble. It is living on giant tick.

Both are signs for totally incompetent and irresponsible management. Clever economists knowing oh so much about theories and complex finance models may laugh at me, but I stick to this simpe formula, because it is simple, sane reason dicdating it:

when the appel costs one Taler, and you have three Taler, you can buy three, two or one or none apples. You can'T buy four or five.

If you need to pay back old debts, you can buy a maximum of two apples only, two Talers. The third Taler of yours is needed to pay the debts.

If you need to put aside reserves for the future (and you always must!), you can buy a maximum of only one apple: one Taler. The second Taler is for the debts, and the third is for the reserves.

I wonder what is so difficult in understanding this.

Our finance system is complex, but complexity does not make it any less insane.

There is no social excuse whatever to live beyond your means, even less there is any "social" excuse to spend more money than your nation can produce by it's own economic vitality. If I personally would run my financial budget the way states do it, I would have committed suicide many years ago, leavong behind a truckload of debts. I invite politicians, bankers and economy managers to correctly understand that as an invitation.

Finances, and others' debts, beside demographic pressure are a formidable weapon of soft warfare, the Chinese illustrate their mastery of this art. So do powerful Arab countries. Saudi Arabia recently has demanded Europe and America to be compensated for the finacial losses once it has run out of oil. Considering the constantly growing influence in the West and the volume to which they buy shares of Western key industries and first line companies, this is not just empty words. They mean it serious.

[Immacolata]

Originally Posted by Skybird

If you need to put aside reserves for the future (and you always must!), you can buy a maximum of only one apple: one Taler. The second Taler is for the debts, and the third is for the reserves.

I wonder what is so difficult in understanding this.

Our finance system is complex, but complexity does not make it any less insane.

I like that analogy. Debt is a very good thing in small measures, because it is the lubricant that makes things go smoother. The oil that greases the society and economy. You can iron out and get things running instead of stopping everytime you run out of cash.

But.
Drown your engine with oil and you risk catastrophical damage to it. While debt and oil are not easily comparable, you should know when to apply it and when to stop. In my personal economy, a bit less than one third of my salary is going towards debt repayment. And that is how it should be.

I find it shocking that UK has accumulated that much debt!