Coffee House

Osborne’s “cuts” in full: an update

21 December 2012

5:48 PM

21 December 2012

5:48 PM

An friend of mine in the City just sent me what is perhaps the shortest email I’ve ever received. The text just read “WTF?” with an attachment: the below graph, from today’s borrowing data, showing that underlying state spending was up 5.5pc in the three months November, compared to the same period last year. The graph speaks best for itself:-

So what the, em, blazes is going on? Simply that there is a detachment between the government’s rhetoric (preaching against the evils of debt) and what the government is doing (cuts averaging <1pc a year and national debt rising faster than that if any Eurozone country). This combination is making credit rating agencies increasingly uneasy as they decide whether 2013 will be the year of the British downgrade.


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  • HellforLeather

    So Fraser, why did you reject my suggestion months ago that you restore the running Debt Clock which you posted during the run-down of Gordon Brown’s regime?

    This Conservative lot (coming from someone who has voted only for them and no other party in previous elections), are on the way out. That’s a given. Dishonest, and useless.

    I invite you, again, to restore that running Debt Clock. Or, are you lot so woven into the Cameron fabric that it would be somewhat uncomfortable?

    • Daniel Maris

      Yes, I wondered why that was dropped.

  • povertycalls

    and the people paying the price of all of it are the OPensioners who have no option but to rely on savings interest
    They have never overspent or got into debt but they are bailing out the debtors ,,,,,,,,,,,,,fairness !!! forget it

  • Daniel Maris

    Disambiguation:

    Cuts: Cuts in expenditure are not the same thing as cuts in services.

    Debt: Owing money to yourself is not the same thing as owing money to someone else.

    Borrowing: You can borrow to fund revenue expenditure or to fund capital investment.

  • HooksLaw

    The great burden of debt
    http://www.bbc.co.uk/news/business-17398014

    ‘the debt that’s caused the problems hasn’t been the debt of households. It really has been down to silly bets by Britain’s banks (and other parts of the financial system), which were NOT bets on UK residential property. Most of them weren’t even in the UK’

    ‘But, allowing for all the other factors that typically affect growth, a study by the Bank of International Settlements finds no evidence that the level of household debt has any growth effect whatsoever.’

  • Boudicca_Icenii

    THAT’s what we’ve been telling you.
    Cameron is running a Continuity Blair Government – and Osborne is running a Continuity Brown Treasury.
    NOW ….. give us one good reason why we should vote CONservative. There isn’t one. We must just as well vote Labour for all the difference it would make.
    THAT’s why I’m voting UKIP. The CONs need a bl++dy good kicking up the ballot-box.

    • HooksLaw

      You are an arse.

      • TomTom

        Au contraire……honi soit qui mal y pense

  • http://twitter.com/alittleecon Alex Little

    Still not heard of automatic stabilisers eh Fraser? What is happening is precisely what many Keynesians predicted would happen – austerity will make the deficit go up.

  • Daniel Maris

    I think Hook’s law gets it right. If you had a massive drop in that period last year (for some windfall reason?) you will get a massive rise this year (if the windfall is not there).

    So, the question is Fraser: is your City friend an example of the “brilliant minds” that run our economy and can’t make sense of even a simple graph like that? I am sure there are financial geniuses in the City but most City types are simply running with the herd.

    • HooksLaw

      I have to ‘like’ that post.

  • JULES

    What is going on is, Osborne’s disastrous cuts are increasing borrowing because it’s pushing up the welfare bill. Also millions are now underemployed and can only survive via tax credits topping up their wages. Tax credits count as welfare spending.

    • HooksLaw

      No – the cuts have barely started.
      Plus, there is a further worldwide slump, ‘it started in the Eurozone’. There is a lack of confidence, there is a squeeze. The economy is not growing and is not generating the necessary revenues so the deficit is not falling as quickly as expected.
      Having said that, people in work are rising and unemployment falling car sales are up – so it is a funny sort of ‘squeeze’.

      Throughout the Brown era revenues did not rise as expected and it seems to be continuing. But we see all the tax evasion avoidance now being exposed. When lefty comedians hide their millions overseas we can genuinely speculate that the problem is endemic.
      Brown developed an economy which relied on us all selling cups of coffee to each other, but we have found that the coffee shops do not pay tax.

      • TomTom

        There is a CREDIT SQUEEZE on private sector business

        • http://twitter.com/rlpkamath Rahul Kamath

          Tommie boy – we agree on something! Though I would caveat your comment by saying there is a credit squeeze on small business that cannot for instance tap into the bond markets. Large businesses have plenty of credit access and cash too.

  • BigAl

    Osborne is leaving a mess for the next Labour government to deal with. The Conservatives were given no credit for delivering a sound economy to the spenders and wasters in 1997 so why take the heat now and deliver real cuts? The electorate are more than happy to live in a fantasy debt land of Balls making. Until the brown stuff hits the fan big time…….

  • Baron

    Fraser, it matters not what the figures show for any given month, quarter, what matters is the entitlement culture that fuels it, and has entrenched so solidly in the psyche of the nation, it cannot be turned back, it’s irrevocable, if anything, it’s bound to get worse even if those in charge can engineer a blip or two south for a while.

    Curiously, it isn’t mostly because the recipients of the taxpayers cum borrowed’ money are against the cuts, which of course they are. It’s because those who administer the transfers, the state employees, the public sector ‘obedient servants’, the holders of the outreach this, the other jobs have grown so massively, they have vested interest in the culture to grow not to subside. On top of it, many a company in the private sector on contract to the Welfare state also benefit from the continuation, enlargement of the status quo, their number’s growing, too. It’s these forces that will perpetuate the culture, articulate the need for it, do everything to prevent it from being altered.

    Politically, neither the boy Osborne nor the darling of the resident tosser telemachus can do a thing about it. To cut for real would bury both, hence the gap between the rhetoric, the real world.

    In the current FY the boy in No 11 will spend almost £700bn of which £90bn will be borrowed money of which almost exactly half, some £46bn will go on interest payment. That £46bn iin interest payments exceeds every other spending except for education, health and – wait for it – social protection at a whooping £207bn. Arghhhh

    http://www.guardian.co.uk/news/datablog/2012/mar/21/budget-2012-spending-tax-visualised

    • HooksLaw

      ‘the gap between the rhetoric, the real world’ – you are wasting your breath on the UKIP loons with that one.
      I am surprised Mr Nelson has not rushed to the defence of his City friend.

      • http://twitter.com/rlpkamath Rahul Kamath

        Doesn’t UKIP’s manifesto have lots of ideas to cut taxes and increase spending, all to be paid for by that magic wand of cutting foreign aid and EU contributions? Ironically, that would be a v. good Keynesian prescription for the economy today.

  • HooksLaw

    Never mind it could be worse. Christmas in Albert Square for instance. All down to the unique way the BBC is funded.

    • Daniel Maris

      Well you have to balance Christmas in Albert Square against being able to watch the whole of Inspector Montalbano without adverts and listening to CD Review on Radio 3 on a Saturday morning. Personally I think the licence fee is cheap as chips.

  • Magnolia

    Does that big upswing coincide with the uprating of benefits by over 5% at the end of last year?

    • HooksLaw

      Interesting point.

      • http://twitter.com/rlpkamath Rahul Kamath

        Raises another interesting question re: the chart. Is it measuring things in real GBP or nominal GBP. Given some of the high y-o-y growth #s (8% etc) I’m wondering if it is using nominal GBP. If so, chart fail!

        • TomTom

          So what would you use for a GDP Deflator when 25% GLOBAL GDP is being created by Central Banks

  • barbie

    Lets face it they’ve all lied to us over decades. Its only recently we’ve been able to know what is going on within parliament it’s self. The expenses scandel must have been going on for decades, and it’s the free press we can thank for letting us know. They are still cheating and have changed the rules, yet again, to suit themselves. So, what can we expect from MPs, lies and more lies. Labour lied about the books, now the Conservatives are lying just the same, they keep telling us we need to tighten our belts, yet spend our money on foreign aid and tell us its or moral duty. Where is their moral duty to protect our own citizens? What we have got is a system developing where the unemployed are being demonised, discriminated against in the new year, via internet bullying to get a job. Where is the Strasburg court now? I hope this will be challenged. Yes, the unemployed should go for jobs if they are there no one disagrees with that, but being draconian and threatening to cut their benefits if they don’t comply is nothing short of blatent discrimination. They may have families to support and feed, the jobs offered may not be near where they live, what then? This is full of faults its got no value before it starts. I’m afraid the Tories are living up to their history and name has the ‘nasty party’, are they so desperate to get people off the books never minding the human circumstances they create. We saw this with the ‘poll tax’ which created a nation divided, angry and riots on the streets. Crime was rife, and social breakdown nearly became a reality. You could not walk down the street after dark. Is this what we really want, just to make the books look more palitable. They’ve got it wrong, very wrong, and it will lead to more problems not less.

  • http://twitter.com/rlpkamath Rahul Kamath

    Fraser – why don’t you show us the data splitting out mandated spending (pensions, welfare, NHS, automatic stabilisers) vs. discretionary spending. For the more knowledgeable of us, this might give your analysis a bit more credibility.

    (To give you credit you have split out govt interest payments; and have also split out capital expenditures where Osborne has, in w/ misguided expediency made his cuts).

    • HooksLaw

      Labour brought forward all readily available capital expenditure. There is a limit to that. FVaced again with a cyclical issue, Osborne is again bringing in more capital expenditure.

      • http://twitter.com/rlpkamath Rahul Kamath

        That is not correct. Most of the executed cuts have been on capex. Osborne is now trying to reverse course. From a finance pov, with interest rates this low, there must be projects that are NPV +ve.

    • the viceroy’s gin

      Hmmmmmm, so you the “more knowledgeable” have figured a way to make massive deficit spending credible?

      You should publish your treatise, for a breathless, unknowledgeable world.

      • Daniel Maris

        Do you have a post graduate economics degree Viceroy?

        • the viceroy’s gin

          Well, compared to you… yes.

          • Daniel Maris

            I’ll take that as a no – which by your own dogma (declared on other threads) means you are not entitled to offer any comments on this subject. Goodbye.

            • the viceroy’s gin

              I’ll take that as you being ignorant and uneducated… and whiny.

        • TomTom

          Do you find that has helped you Daniel ? Didn’t you learn enough with your first degree ?

    • Telemachus the dufus

      Just like Telemachus, you are a very arrogant man. You think you are clever but you aren’t as clever as you think are. I’ll let you ponder on why I say that, but you and telemachus could almost be twins. That isn’t a compliment!

      • http://twitter.com/rlpkamath Rahul Kamath

        Do u actually have anything to add to the discussion ? I see u are so hung up on Telemachus that u started an ID just about him. Lol.

        • Telemachus is a dufus

          I’m not hung up on him, i do it because his roll on this site is to close debate down at all costs. He lies, misrepresents, and is basically a troll. He has nothing to add but to twist the truth to represent his pay masters. Me, i have my opinion and let my voice talk at the most important time, an election. That said, telemachus is so easy to combat in debate. And yes, my part of this debate is that you are an arrogant man. Does the truth hurt?

          • http://twitter.com/rlpkamath Rahul Kamath

            Your calling me arrogant is not the truth, its simply your opinion, which I am not interested in :-)

            • Rahul is a dufus

              Yes, and remark merely proves my point because somehow you think you are superior, and you are not. You are a very detestable man. We need open debate on this site, not someone who believes they are omnipotent and no one elses opinion matters.

              • http://twitter.com/rlpkamath Rahul Kamath

                I shall now start an ID names dufus is a dufus Lolz.

  • http://www.facebook.com/jim.hollett.9 Jim Hollett

    We’re going to be ungovernable when the cuts actually do begin.

    • Gordon Brown

      I suggest you forget the cuts and pursue a spend out of recession agenda

    • barbie

      I agree, please read my four pennath above. If you are old enough to recall the poll tax riots you will understand what I mean, we had a Tory government then as now.

  • Cogito Ergosum

    To say “this graph speaks for itself” is mistaken. It is labelled “UK Govt Current Expenditure”, but what it seems to show is the percentage difference between, presumably, one year and the previous year. These are actually different things.

    Maybe one day we shall have numerate commentators on the Speccie. Also flying bacon factories.

    • http://twitter.com/rlpkamath Rahul Kamath

      Yeah I had to take a second look to understand the chart. Also, last I checked the coherent way to measure govt expenditure was as % of GDP. Showing % change in actual expenditure y-o-y strips out seasonality but is otherwise confusing.

      • the viceroy’s gin

        Well, you the “more knowledgeable” should understand that with zero growth, GDP is extraneous information, and year over year spending numbers tell the entire story, not a hint of confusion involved.

        • http://twitter.com/rlpkamath Rahul Kamath

          If u looked at the chart more closely, you’d note it started fm 2004. There has been plenty of growth and shrinkage from 2004 to 2012. Dumbass.

          • the viceroy’s gin

            We’re talking about right now.

            Dumbass.

            • http://twitter.com/rlpkamath Rahul Kamath
              • the viceroy’s gin

                Wow.

                Nothing.

                That’s the first and only sensible thing you’ve said.

                I’ll have to give that an arrow up.

                • http://twitter.com/rlpkamath Rahul Kamath

                  Wish u would follow my lead :-)

                • the viceroy’s gin

                  Whoops, you spoke again. Arrow down.

          • TomTom

            Yes but in MAY 2010 osborne got into power and CHANGED EVERYTHING getting a grip on the Spending which is why we have “Austerity” and as “Austerity” continues we shall have £1.6 TRILLION National Debt by 2015 up a mere £500 billion over May 2010 when osborne started to CUT

            • HooksLaw

              Non discretionary departmental spending is being cut by 25%. Ed Balls talks cobblers, but the fact is that if the govt were to cut too fast and deep then it would ruin the prospects for growth. Balls’ accusations are however cobblers. Osborne is treading the fine path of cutting spending but not throwing the baby out with the bathwater.

              • Daniel Maris

                Osborne’s Sin – the “original sin” of this government – was to panic half the country into thinking they were about to lose their job. That collapsed consumer confidence. That deepened the recession and hampered the recovery.

                • http://twitter.com/rlpkamath Rahul Kamath

                  Let us not forget the VAT increase along those same lines.

              • http://twitter.com/rlpkamath Rahul Kamath

                There is an interesting discussion on this point on Simon Johnson’s blog (Mainly Macro). He argues that the correct baseline for govt spending is +2% real annual increases (and I think he would have this after automatic stabilisers) and anything less than that is a cut. I challenged him on this (i.e. why 2% growth when u have flat GDP) and didn’t get a satisfactory answer.

            • HooksLaw

              Public net debt in 2011 (note the election was in June 2010) was 905 billion
              Public net debt in 2015 is projected to be 1365 billion. This is the very big difference of 460 billion.

              In context
              Darling left a deficit of 160 billion. Even if that were reduced to zero over 5 years by cutting it in half each year this would add 310 billion to the national debt. The govt are faced with the additional problem of weakness and recession in the Eurozone, plus the USA possibly falling off a fiscal cliff.
              The USA Germany France and the Netherlands Ireland Belgium Italy and Spain are our top export markets
              So there are cyclical as well as structural deficits to account for.

              Non discretionary govt departmental spending is being cut by 25%. There is a big row at the moment over more welfare ‘cuts’. Its plausible to think this issue could lead to an electoral defeat. I would have thought you would be supporting the govt not attacking it.

              • TomTom

                Thursday 6 May 2010 was the date of the General Election

      • TomTom

        You are clueless. Really clueless. It is a CHART showing Year-on-Year Changes in CURRENT CENTRAL GOVT Spending NOT Total Spending simply CENTRAL GOVT. It matters only from 2010 to 2012 to reveal that OSBORNE has an uptick in Spending over 2011. That is ALL it says. It means that Osborne has FAILED to control CENTRAL Govt Spending YEAR on YEAR. That is ALL it says…

    • HooksLaw

      I am glad you are a dubious as me about its usefulness. The fact that someone in ‘the City’ says ‘WTF’ is a bit worrying though.

      • TomTom

        Why don’t you spout on about Quantum Mechanics ? You must know something about something. If Osborne keeps “cutting” like this the £500 billion increase in National Debt by 2015 will make Gordon Brown look a conservative in comparison

        • HooksLaw

          You are too thick for words. Where would the nation be if say £150 billion were taken out of spending in a single year? Labour unleashed the spending genie. It cannot be turned off quickly without massive deprivation.

          We need long term persistent pressure on spending to rebalance the economy. You are simply one of the regular speccy hysterics

          • TomTom

            They are not reducing spending simply shifting it towards their preferred priorities like Foreign Aid. The nation says NOTHING as Spending increases and National Debt mounts……it is clear the future is Greek

        • HooksLaw

          And –
          http://www.bbc.co.uk/news/business-17398014

          ‘But, says Broadbent, it is also rather stupid….’

    • Daniel Maris

      Good point – not something that would necessarily occur to Fraser or his WTF City mate.

  • telemachus

    Methinks this is Osborne shamed by Balls into spending for growth
    Why should we not applaud?

  • HooksLaw

    It is up on the same period the year before because at the same period the year before the spending, well your graph, had dropped dramatically.

    You would be telling us that Brown and Darling were constantly adding to the deficit and debt up until the crash hit (which put us in a bad place). Yet your graph shows year on year spending in the spring of 2007 massively lower than the same period the previous year.

    WTF?

    • Archimedes

      They got the good headlines for that last year – only fair they get the bad ones this year.

    • http://twitter.com/rlpkamath Rahul Kamath

      Well spotted hooky! More dodgy Frasernalaysis.

      • the viceroy’s gin

        Nothing wrong with that chart.

        You hard leftists might not like it, of course.

        • http://twitter.com/rlpkamath Rahul Kamath

          Dunno abt hard leftists, but those of us familiar with financial and economic analysis sure don’t.

          • the viceroy’s gin

            Which certainly doesn’t include you, and you know plenty about hard leftists, tosspot.

        • Daniel Maris

          Hooks Law is a “hard leftist”. LOL In that case you are a serious commentator…

          • the viceroy’s gin

            And you are seriously ignorant and uneducated.

  • GaryEssex

    Yep, that’s where we are heading – for a downgrade. When will everyone realise that this government is not cutting anything very much and certainly not enough to make a real dent in the deficit, let alone start to reduce the mountain of debt. In fact we are nowhere near even getting started on the debt.
    We need to cut and cut hard: overseas aid, contributions to the EU, public sector pensions (especially police pensions), raise the retirement age to 70, benefits, cancel Trident and so on and so forth until we get our books in order. Otherwise it’s bankruptcy time.

    • telemachus

      No
      We must spend
      Spend for growth
      Growth is self fulfilling and as it marches on taxes flow in and the deficit falls.
      Some of the upturn in the graph above is benefits as Osborne threw folk out of work

      • HJ777

        Government spending rose rapidly from 2001-2011.

        That really worked, didn’t it?

      • Telemachus is a dufus

        So labour didn’t throw anyone out of work then! And spend for growth, what with? We don’t have any money left. GB spent it all trying to buy the last election and having a deficit during a false boom. You are just another idiot who believes that money grows on trees. Sorry to disappoint, but money doesn’t grow on trees. We as a nation need to get our backs in to it and work for our living again.

        It was all going to end up this way, spending like there is no tomorrow and borrowing on the never never is not the answer.

        • wobble

          Money does grow on trees, cut it down, pulp it,dry it, print, it…..
          bingo !!!!

          money, ……..jobs a good’un…!

          • Wooble is a dufus too

            No, you mean you can make money from trees, but i doubt its enough to pay off our national debt, dufus.

      • TomTom

        That is what Spain did and look where Spain is. It is what Japan did and look where Japan is. You have ZERO idea Tel-Boy and no idea of Funding and Finance.

        • http://twitter.com/rlpkamath Rahul Kamath

          Look at the difference between govt bond interest rates between Spain and the UK/ Japan. It tells you, empirically, that markets are willing to trust the UK and Japanese govt with money. Several US economists are sagely asking why the government is even taxing its citizens right now when they can borrow from the markets to meet their funding needs (I do not go so far).

          The difference in rates is because of ‘control of currency’. By definition, if a soverign controls its currency, it cannot default.

          It also tells you how little markets worry about inflation right now; they are worrying about demand and growth. Empirically the new Keynesians – Martin Wolf, Krugman, Portes, Simon Johnson etc – have won this round over Osborne etc.

          • BuBBleBus

            Yes, but that is a short term affair. The hot money will
            always follow the scent. The problem is where does it lead to? This is an
            emergent crisis and a good Xmas game would be to guess which country will
            experience a military coup first (not counting those Islam states which are so
            far behind the times that they have coups every week it seems). Probably
            Greece, but they matter little. The masses do not have a voice in this Bankster
            world run by puppet policitians, but they are suffering. Imagine all those
            Eastern Europeans having to survive on half-pay, or less. Yet they still want
            to belong to a greater Europe, that is where the security is. And Great Britain’s
            role should continue to be part of the debate as to how the disparate and
            unstable Europe can evolve. Perhaps they will listen to reason, perhaps not.
            Tom Tom is all for banging the war drums. He has a point, war is inevitable,
            the only question is when. Choose your enemies carefully.

            • http://twitter.com/rlpkamath Rahul Kamath

              Japanese interest rates have been low for something like 20 yrs.

              • TomTom

                Yes and deliberately so. It is called a LIQUIDITY TRAP and a sign of Secular Stagnation

          • HellforLeather

            Crap. I think ZeroHedge interpret this stuff a lot better than you.

          • TomTom

            Not so. Since US and UK have the world’s largest pension funds and they are being forced into Bonds it is captive. Japanese Funds are in run-off as the demographics have caught up with them. You should ook more at Portfolio MIx before offering erroneous opinion

      • Ron Todd

        Employment is up unemployment , despite mass immigration, is down. Cut what the government and local authority do so they need less money cut red-tape , every opposition promises to none do in office, cut taxes on enterprise Blair/Brown/Balls made the public sector grow harder to make the wealth generating sector grow all the politicians can do is get out their way as much as possible and let them get on with it.

      • povertycalls

        have nothing whatever to spend solely thanks to low interest rates
        I was comfortable and could treat my grandkids but now Xmas is off this year my income has nose dived by 2/3rds thanks to low interest rates

        • alexsandr

          check out funding circle and zopa. You could get up to 9% pa

    • http://twitter.com/rlpkamath Rahul Kamath

      Why are you worried about a downgrade?

      • HooksLaw

        Correct – its all relative. Everybody’s been downgraded.

        • http://twitter.com/rlpkamath Rahul Kamath

          Never mind the credibility of the rating agencies or the knowledge of our resident econ-commentators.

          • HellforLeather

            Trying to make a point — if so, please do so.

            Otherwise, you come across as just a bit of noise

        • TomTom

          Yes and Britain is like Greece and France each of which has a City of London…….and the LBO business in Greece has been a success story http://www.debtbombshell.com/

        • HellforLeather

          Yep, that is how civilizations decay. Just accept decline.

          Forget any exhortations towards excellence.

      • TomTom

        Because Britain has a huge Sovereign Debt coupled with a huge Banking Debt and the highest ratio if Bank Assets to GDP on Earth

        • TomTom

          and the Highest Bond Prices in 300 Years which makes a correction devastating for the global economy

        • HooksLaw

          Greek debt to GDP 2011/12 was 171%. It plans to reduce it to 120% by 2020.
          Italy’s is 120% now.

          UK debt to GDP was 85%
          The Euro area generally was 87%

          • the viceroy’s gin

            UK public debt to GDP ratio is 91.2% as of today.

            External debt to GDP ratio is 508% as of today, one of the very worst on planet Earth, and more than double Greece or Italy.

            And the 508% doesn’t include the much mentioned 4.7T pension shortfall.

            • http://twitter.com/rlpkamath Rahul Kamath

              Where pray do u get this 508% figure from?

              • the viceroy’s gin

                The same place you got your fantasy immigration rants.

                • http://twitter.com/rlpkamath Rahul Kamath

                  Lol my rants are based on data. Your 508%, well ill just take it as fictional.

                • the viceroy’s gin

                  No, you ranted immigration fantasy, and then when challenged refused to support your fantasies.

                  Right back at you, tosspot.

                  In any event, you don’t appear to be “knowledgeable” enough to understand what external debt is, so it’d be a wasted exercise in any event.

                • http://twitter.com/rlpkamath Rahul Kamath

                  So both because I think you are a tosser and a braggart, and because I was curious about your 508%, I spent a few mins on google.

                  As it turns out (from FT Alphaville if u want to educate yourself), the number you reference is closer to 400%. It is almost wholly a function of the external liabilities of UK banks i.e. UK assets owned by foreigners. At the same time, UK banks and other domestic corporations/ individuals own foreign assets/ lend to foreigners.

                  The net balance between these two numbers (what matters) is -ve 10% of GDP, i.e. we owe foreigners £150B more than they owe us.

                  With this cleaner bit of data, we can all fall asleep happy and content that we are safe and secure. You may even have learned a thing or two.

                • the viceroy’s gin

                  No, you’re wrong on about every count, and you don’t understand what external debt is, as I suspected. Good of you to admit that, by the way. It was a suspicion, now confirmed.

                  And just to explain matters to you, since you’re an ignorant tosspot, the 508% of external debt is owed in foreign currency, meaning when Weimar Republic style inflation kicks in, it’ll still be owed in that foreign currency, no matter where Weimar Westminster values its currency.

                  Meanwhile, foreign debtors that you’re blathering about as owing in BoE currency will be MORE than happy to pay off their debts in that currency, once it’s inflated exponentially. They’ll just hire freighters to ship back that worthless paper. All of it. Tons and tons of it. You can meet the ships at the dock and then go off and buy a loaf of bread with the proceedings.

                  You see, that’s why the little calculation you’re making is worthless, and only the 508% owed matters, one of the highest ratios on planet Earth.

                  You clueless tosspot.

                • dalai guevara

                  Well well, no need to be abusive all the time, is it? We know you are there.

                  Some external sources would have claimed a year ago that the UK debt level weas actually…a 1000%. Not that I necessarily agree with them. Here as always a source:

                  http://www.businessinsider.com/g10-countries-by-total-debt-to-gdp-2011-12

                • TomTom

                  Financial Debt is very easy to assess. Try this – some of the Greek Sovereign Debt has an English Legal Jurisdiction ie. Sovereign Debt issued by Greece is subject to English Courts of Chancery in The High Court because it is issued through London. Italy and Greece alone have a £100 billion exposure for UK banks which is a huge chunk of EQUITY……….

                • dalai guevara

                  Yes, that perhaps partly explains the high UK ‘financial’ debt levels, but can they really be ‘attributed’ to the UK? Or are we actually talking about two different things here…I think we are.

                • http://twitter.com/rlpkamath Rahul Kamath

                  Read the post from the Coppolla comment blog, as provided by Tom. Its a good summary of the different types of debt, issues around the different kinds of debt. It says roughly the opposite of what (I think/ guess) Tom says.

                • the viceroy’s gin

                  You know, you might be stupid, but the other guy is stupider. So you got that going for you, at least.

                  Yes, that number has been claimed at over 1,000%. I’m using the conservative 508% figure, but it’s likely more than that. I just checked and it’s still at 508%. It’ll jump a percentage point soon, and then another and then…

                • http://twitter.com/rlpkamath Rahul Kamath

                  What currency do u think we hold foreign assets in? GBP or foreign? Idiot.

                • TomTom

                  I think you might be surprised DImshit. There are only two major Currency Blocs – Dodgy Dollars or Emetic Euros plus Yen from Declining Japan……..there is in fact NO CURRENCY that offers any safety. Do you work hard at being arrogantly stupid or is it simply cultural ?

                • the viceroy’s gin

                  Stop whimpering, son. You got owned.

                  That’s what happens when you start blathering, you ignorant tosspot.

                • HellforLeather

                  Please back down from being abusive. If you have a strong argument, people might buy into it. Concentrate on an argument, rather than … well, the way you’ve gone about it above.

                  We’ve reached the stage that when I see your tag, I’ll just move past it.

                • http://twitter.com/rlpkamath Rahul Kamath

                  Brilliant! I have no desire to share my knowledge/ expertise with you.

                • the viceroy’s gin

                  …nor the capability.

                • TomTom

                  When it is in limited supply you should conserve it

                • Daniel Maris

                  LOL Nice one Rahul. I’ve noticed Viceroy doesn’t like accurate data – so please keep giving it to him (between the eyes).

                • the viceroy’s gin

                  And I’ve noticed you’re an ignorant and poorly educated wanker.

                • TomTom

                  Yes and those foreigners can pay because they are in great shape. Did you perhaps check the Loan Book of banks trading out of London ? Did you check how much Merrill Lynch parked in LOndon before going bust ? Did you check the exposure of JPM’s Whale before reaching your conclusion ? RBS alone has a balance sheet = 100% GDP. http://www.planbeconomics.com/2011/12/19/debt-to-gdp-ratios-uk-900-japan-600-europe-500-us-300/

                • TomTom

                  You do not compehend for some strange reason. It is NOT UK Banks – it is Banking Transactions carried out through London but not necessarily IN LONDON. The Offshore Banking Centres – Britain has more than any other nation run over London. Lehman went under NOT because of US Bankruptcy Law but because of ENGLISH Bankruptcy Law leaving its Trading Positions exposed and Cash Positions negative. It is NOT STATIC as you imagine but dynamic because London is the main global Forex Centre and the benchmark for LIBOR trades – it is permissive compared to New York which is why Madoff, Lehman, Merrill Lynch etc, JP Morgan run trades over London as UK Liabilities. Lehman went bankrupt on a Saturday because Paulson arranged it that way – he did not check with London – Lehmans scooped ALL cash from Lehman London to New York on Friday before going bust…..Monday morning there was NO CASH in London to cover trading positions which puts London Directors in breach of the Insolvency Act. ………..It is incredible how little business knowledge you have……you are as doltish as the politicians and FSA dorks that caused this mess…….you simply have not got a clue and that is why this is going to be a eal re-run of the 1930s when the other shoe drops

                • http://twitter.com/rlpkamath Rahul Kamath

                  Tommie boy – I tend to approach your posts with the attitude of an onlooker at an accident site, both horrified and fascinated. I want to tear my eyes away but they are riveted to the crash scene.

                  What on earth are you on about above? What does an individual UK banking entity becoming insolvent have anything to do with the government’s fiscal position/ outstanding debt?

                • TomTom

                  You are poorly educated and know zilch about Monetary Theory. I suggest Arcadia University replaces you as tea-boy to their students looking for UK placements. Why do you think Gordon Brown propped up the Banking System in London ? Why don’t you read up on why AIG was the ONLY insurance company nationalised in the USA ? Why don’t you ask Christine Lagarde why she begged Paulson to nationalise AIG ? Why don’t you learn something about how the City of London functions and how the Offshore Banking System and Shadow Banking System function ? Why don’t you learn that there is NO difference between Private Sector DEbt and Sovereign Debt when the sums are BIG – go look at Australia after Holmes a Court and Alan Bond………

                • http://twitter.com/rlpkamath Rahul Kamath

                  still no idea what you are on about (throws up hands in despair)

                • TomTom

                  You are obseesed with bilateralism and have no idea of Syndication or Traded Liabilities used to pyramid up as Derivatives. There is no simple Asset-LIability Match it is DAISY-CHAINED which is why Derivatives are $750 TRILLION and Global GDP is only $70 TRILLION

                • HellforLeather

                  And you want to be taken seriously on this, or any other, blog?

                • HellforLeather

                  “Lol of my rants are based on…”

                  If you RANT, as you admit, why should anyone take you seriously?

                  Rant elsewhere. Debate, if you wish, here.

              • TomTom

                MORGAN STANLEY

              • TomTom
            • HooksLaw

              Thats because pensions is not a debt.

              We are one of the biggest property owners on the planet. We have a mortgage on the house. Do you? In fact as part of a failed attempt to look after my wife’s mother in old age my wife and her sister also own another house and are landlords. The rent covers costs but there is still debt in the case of the mortgage.

              • the viceroy’s gin

                Right, pensions are not a debt. The external debt at 508% of GDP is a debt. It’ll be higher tomorrow, and even higher the day after. Think the 4.7T pension obligation helps or hurts that status?

                You can mortgage whichever and whatever you want. The problem comes if you have to borrow that mortgage in foreign currency, which such as the Cameroon wankers are doing, up to the 508% figure, currently.

              • TomTom

                The Mortgage is a Loan to you the House is Collateral. If you Mortgage the Collateral 6-7 times over you have a Re-Hypothecated Asset and when you default noone knows who owns the Collateral which is claimed by holders of Loans.

              • TomTom

                Private Sector Pensions are a Debt and an Asset. ALL Debts are Assets to one party and all Assets are Debts to another…..Pensions are claims on FUTURE Production whether Funded or Not. If Production does not materialise because of a Lower Trend Growth Path following a Credit Crisis then there is a LIABILITY problem whether crystallised or not…………..

                • HooksLaw

                  Future entitlement to a pension is not a debt. Who knows what it is but a debt is something you owe on what you have borrowed. We do not have 5 trillion of borrowing.

                • Lee Moore

                  Nonsense. There are all sorts of kinds of debts and borrowing – ie where the debt arises from a loan of money – is just one of them. Debt arising where you don’t pay immediately for goods and services (eg credit card debt) is just as much debt as borrowing. Obligations to make future pension payments are still debts. The state’s debts in respect of its employees pensions, and the state pension, greatly exceed its debts in respect of actual borrowing, ie gilts. That’s why people who claim that there’s no debt problem because the UK had a much bigger debt to GDP ratio after WW2 are talking nonsense. After WW2 the state’s pension debt was close to zero. Now it’s several times bigger than the official National Debt (ie gilts.)

            • TomTom
            • Dimoto

              Why are you always abusing the EU, but when it comes to the national debt, you use their cockamamy “treaty definition”, rather than the traditional series ? Is it because their’s looks much worse ?

              • the viceroy’s gin

                I don’t really understand what you’re asking, so you’ll have to expand a bit.

          • http://twitter.com/rlpkamath Rahul Kamath

            Historically UK debt to GdP has gone as high as 300%.

            • the viceroy’s gin

              That what you’re advocating?

              • http://twitter.com/rlpkamath Rahul Kamath

                Nope. Just observing that all this alarm abt 85% is nuts in a broader historical context.

                • the viceroy’s gin

                  It’s 91.2%.

                  And rising.

                  Just waiting for the day when interest rates start rising, and the house of cards caves in. It shouldn’t be long now.

                • http://twitter.com/rlpkamath Rahul Kamath

                  Hope you are converting your savings into gold. When the economy recovers and gold prices fall, we can all laugh at your impoverishment.

                • the viceroy’s gin

                  You are a very strange wanker.

                • TomTom

                  India has 18,000 tonnes of gold stocks worth $800 billion and 11% global stocks so they will be destroyed when Kamal’s dream comes true

                • TomTom

                  It is 900% GDP

                • HooksLaw
                • dalai guevara

                  …which is why the PUBLIC SECTOR is not the issue in this debt crisis, just like in Spain. Both countries sit perfectly within agreeable limits.

                  So if it’s not the PUBLIC debt that is the issue, why is everyone making us believe it is?

                • the viceroy’s gin

                  No, the agreeable limits are less than 90%, as recent research seems to indicate that economic growth will drop off if public debt goes above that point.

                • the viceroy’s gin

                  That’s one chart, but TomTom’s link says it was 81% in second quarter 2011, meaning it’s quite likely at the 91.2% others are reporting it at today.

                • the viceroy’s gin

                  I’m trying to stay conservative with these numbers, but I think you’re likely right, if not too conservative yourself.

            • TomTom

              Never without having ASSETS to cover it and being propped up by others. NEVER has it exceeeded 200% and that was followed by AUSTERITY = RATIONING which has not started yet. The TOTAL UK Exposure is 900% currently. Further, we do not control our Currency – we have a currency which was devalued 30% in 2008 and which could collapse igniting hyperinflation which is the mechanism by which hyperinflation occurs.

          • TomTom

            UK is home to a major financial centre unlike Athens. The FUNDING of UK based banks is tied to the Sovereign DEBT position and those banks require MORE funding than Greece or Spain and compete with Sovereign Bond Issuance globally. The Funding of LBO Rollovers is huge. http://www.qfinance.com/capital-markets-viewpoints/a-not-so-cheerful-future-for-lbos?page=1………….there is much more riding on UK Bond Ratings than in any other EU country because NO EU country is as LEVERAGED as the UK. Anyone who think UK exposure is simply State Debt is bonkers and has no idea how Alan Bond and Holmes a Court busted Australia saved only by raw material exports.,,,,,,,,,,,,,PRIVATE DEBT is a SOvereign Affairs nowadays which is why Spain is bust BECAUSE the Cajas are bust and propped up by the State, RBS alone is bigger than UK GDP and 82% taxpayer owned. Hook’s Law knows more about the toxic assets inside RBS than UKFI apparently and is clearly a hugely successful Bond Trader in Distressed Assets

          • TomTom

            Italy’s Private Sector Debt is very low compared to UK. it is TOTAL DEBT EXPOSURE that matters and the UK has Private Debt + Public Debt – one should usually be in surplus. Italy has a higher savings ratio than the UK. Borrowing is simply Deferred Taxation circumventing parliamentary control – Britain has huge tax increases ahead to cover this mess -it had a Basic Rate of Income Tax of 35% in 1970s and a top rate of 83% to suppress demand and transfer resources to debt repayment from WWII…………….but for amusement sake take a look at “Austerity”…..”
            For 1947-48 a special contribution was payable when a person’s total
            income exceeded £2,000. For investment income over £5,000 it was 50%.
            So with income tax at 45%, and surtax at 52.5%, the effective rate was
            147.5%.
            In 1967-68, the special charge was imposed. For investment income
            over £8,000, the rate was 45% which – with income tax at 41.25% and
            surtax at 50% – meant a total rate of 136.25%.”

            • HooksLaw

              Italy’s government debt is what it is and the UK’s is what it is. Your rest is fantasy.

              ‘had a Basic Rate of Income Tax of 35% in 1970s and a top rate of 83% to suppress demand and transfer resources to debt repayment from WWII’ … Cobblers. Taxes were to fund labour extravagance and to simply punnish the wealthy. When the top rates came down the tax take went up.

              • TomTom

                Edward Heath was Prime Minister 1970-1974….Conservatives were in power 1951-1964……by 1979 Consevatives had been in power for 23 years

    • povertycalls

      i agree with everything except not raising retirement age because one of the biggest reasons the young cant get jobs is theres too many 70yr olds still working ……….why ? because they cant live on State Pension and theirb savings have been savaged

    • doc

      This is why poms opposed our independence…. our natural resource wealth is paying for all this (or at least propping it up before it finally implodes). YES was a missed opportunity for us,

  • Adrian Drummond

    This revelation fits neatly into the current national characteristic of dishonesty at almost every level of British society.

    • telemachus

      No only in the higher echelons of the Tory Government

      • TomTom

        “Le monde est plein de fous,

        Et qui n’en veut pas voir,

        Doit se tenir tout seul,

        Et casser son miroir.”

        (Thomas Love Peacock, 1831)

        • dalai guevara

          I prefer the citation of the Rene Magritte of economics:

          Ceci n’est pas…austerity.

        • telemachus

          Mieux vaut un fou qu’un étron
          (telemachus 2012)

          • TomTom

            Pleased to see you had the choice before choosing to be a Fool

      • Andy

        Biggest liars are found in the Labour Party.

      • HellforLeather

        This Conservative shower realised Labour got away with the same tripe for so long, so they’ve gone for the same dope

    • Daniel Maris

      What revelation? Fraser and his mate have clearly misinterpreted the graph, as Hooks Law’s comments show.

      • ToryOAP

        Difficult to read but it looks like, if one applied a regression, the trend line is downward spending and on a comparative basis clearly indicates reduced yearly spend. Not enough information to understand why there is so much variation. WTF indeed to expect intelligent comment on one graph.

        • Lee Moore

          No, it’s a graph of the percentage spending increase over time, not a graph of the spending itself. The trend is therefore a lower rate of increase in spending, ie up but more slowly, not lower spending. This is hardly austerity. The mystery is the politics. Osborne gets all the “Cuts Wicked Cuts !” headlines, cementing the popular image of Tory = Gradgrind, without delivering any actual cuts at all. Meanwhile the only people who would actually like cuts – the bond markets – can see that it’s a trick.

          They don’t call it the stupid party for nothing.

          • BuBBleBus

            The Conservatives are pleased to inform that our Party has
            recently relocated to Left-of-Centre, London N1. This relocation will enable us
            to provide an even better service to you all in the future.

    • HooksLaw

      The ‘revelation’ seems to be flawed and thus so is your conclusion.

  • the viceroy’s gin

    You were informed of all this years ago, back when you were shrieking hysterical approval for “the cuts” your Cameroonian heroes were falsely alleging to be in play.

    • telemachus

      Not sure this is fair
      Osborne tried hard
      This is just documentation of his failure

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