4 replies to this topic

[Ion Cannon!]

To begin with, how can most of the world be in debt - yet still function? Who is lending the 100's of billions to countries like England and the US. Secondly, how on earth do we expect to get out of it? Englands national debt is nearing 1 trillion pounds, and we just seem to borrow more, with an election coming up none of the parties seem to have actually suggested anything which will come close to reducing that amount and the tory figures can be picked apart by a 5 year old, they are that absurd.

Labour recently announced they would raise NI - which basically every boy and his dog are calling " A tax on jobs " - that it may be, but the savings have to come from somewhere. I doubt if they raised income tax they would be any more popular.

None of the parties seem to really want to tell us how screwed we actually are. Theres been a general worldwide boom for a good 10 years, but now we have to pay the price of that boom. Efficiency savings of 9Bn? even if the tories manage that its not even 100th of the total debt - which is just set to increase.

So, whats going to happen? Is the elected government going to come in and make huge cuts? or are they going to come in and make large tax hikes - because we cannot go on like this, being mollycoddled for the sake of ignorance and keeping people happy. Sure, cuts and tax rises will be unpopular, but why can people not see that we NEED them. I just hope the elected government has the balls to do so.

However, you cut to hard and fast and you risk swallowing the recovery whole. I don't feel NI is the best tax to increase though, to begin with scrap the trident upgrade and scrap the ID card scheme. That saves you about 25Bn. Next cut benefits or at least get people who shouldn't be on benefits into work. IIRC we currently spend more on benefits - about 140Bn ( Although I believe it was about 165Bn last year ) - than we do on Schools, Universities and the NHS combined - which is just fucking absurd. I fail to believe that the entire 165Bn is needed, and I believe the amount can be reduced fairly significantly.

Tax rises will obviously be unpopular so to combat this, tax the super rich till their eyes bleed, they have so much money that they don't know what to do with it anyway. In later years you can then phase in gradual tax increases and cut other trivial government projects. By staging the tax increases you allow the economy to hopefully recover enough so that a small tax rise won't hurt it. While at the same time you save billions per year on benefits and gain some extra income by taxing the rich more. That is probably how I would go about restoring the public finances were I the chancellor. Now obviously I don't have all the figures nor am I the chancellor, but I feel its the minimum needed to stop the insane amount of debt we are accumulating, while also allowing the economy to recover.

So, if you were the chancellor - what would you do?

[Chyros]

The debts are so high now that Europe and especially the US are going to have a bit of trouble dealing with it. For years they're trying to pay off the debt in the Netherlands which is atm about 350,000 million euros. It is possible to do so over time though since the debt is not THAT big compared to the GDP (about 45%); a debt-to-GDP rate of 60% is doable as long as the deficit is 3% max and the annual, nominal GDP growth is at least 5%. For the Netherlands and the UK (which is at about 43%) it is possible to come out of the debt system, though you'd need one or two big pay cuts here and there. Nothing impossible though, though it'll mean the public taking a hit. In fact, under right-wing management the Netherlands have tried several times to pay off the debt, and were very well on the way, but never managed to succeed in 4 years before a labour party took over, spent all the money they had saved up and then some. For some European countries like Greece who are all but broke (the country of Greece is actually officially bankrupt) this is not really possible in a foreseeable term and they will thus have major problems and falling standards of life dealing with this debt.

The US is a very interesting case as it has the biggest debt in the world but also the biggest GDP (ratio debt-to-GDP about 95%). This is interesting because even though a debt of, at the time of writing, $12770983814439.02 is a quite imposing figure, really heavy cuts into the budget could bring this figure down substantially, perhaps to doable levels. Would mean very prolonged falling standards of life to actually get it to more acceptable levels, but it isn't impossible. Of course this kind of depends on how the US manages to implement their health care system (a centralised, public health system could easily save billions of the overspending in health care the US is currently doing) and on if they want to attack other countries (which is of course responsible for the gargantuan size of the debt figure as it is today in the first place). The US does have the massive economic power needed to drag itself out of it, strictly speaking, though.

Lexor, on 3 Apr 2010, 5:05, said:

So, if you were the chancellor - what would you do?

Cut all finance to support illegal wars and start cutting heavily in the defence budget, for starters. This is especially easy for the Netherlands since we don't really even need an army (in fact, the Netherlands does not have enough troops to fill the unit of measurement requirement of an "army" (53,000 - officially an army is between 80,000 and 200,000)). Other countries might want to make defence budget cuts here and there and start more diplomatic measures if need be.

[Golan]

This is the only logical conclusion of the free nations of this world selling themselfs out to international capitalism like the whores they are! As long as governments are willing to cater the needs of the few instead of the many, there won't be any chance of a release from this damnation. The capitalist is a vulture feeding on the decay of society and democracy, feasting on the corpses willingly offered to it. But once you need a bit of their help, out they go to the next best wench willing to have them feed on her own flesh!

What to do? Accept that a state's finances are only there to bribe the rich and disembowel the poor! Only if a country is above this petty necrophilia can it truly be free!

[Ion Cannon!]

Golan, on 3 Apr 2010, 14:51, said:

This is the only logical conclusion of the free nations of this world selling themselfs out to international capitalism like the whores they are! As long as governments are willing to cater the needs of the few instead of the many, there won't be any chance of a release from this damnation. The capitalist is a vulture feeding on the decay of society and democracy, feasting on the corpses willingly offered to it. But once you need a bit of their help, out they go to the next best wench willing to have them feed on her own flesh!

What to do? Accept that a state's finances are only there to bribe the rich and disembowel the poor! Only if a country is above this petty necrophilia can it truly be free!

Capitalism is far from perfect, but communism just doesn't work. Capitalism wouldn't be so bad in itself if it wasn't a "Profit or nothing" mantra. Many large companies axed staff during the recession despite making a profit. They axed the staff because they wanted to make more profit. This is the kind of buisiness dealing I dislike.

[BeefJeRKy]

Capitalism gets rotten once its scale goes multi-national or even across a large region. The smaller the businesses, the closer you get to perfect competition which benefits consumers like us. However, you want to avoid halting innovation, so you need to introduce monopolistic elements to allow for innovation to play a worthwhile role and introduce monopolistic competition in the market.

Anyway, back to the issue of debt, if the whole world got caught up in debt, it would make sense that there would be a lot of defaulting in credit and a sort of reset would occur which could finally bring about a massive change in the understanding of economics and money policy. Stock markets should be changed to match real value and not speculative values. Loans and mortgages should be clearly traceable to collateral. And the heads of companies in general should cut down on their excessive spending habits.