Delusional. Team sport is over. Finished. Done. Forever. The last (legal) game of cricket in England was played last year.
Don't be silly. The likes of football have the money to test all the players and staff on a regular basis, and 20 something super fit individuals have more chance of dying from contracting something nasty off the hooker they are tapping during lockdown than playing a match.
How do they recruit players? Who is going to televise without the risk of people congregating to do watch on TV? People don't understand, this isn't a temporary lockdown, it will last our lifetimes. It's all over. All of it.
The other point to bear in mind in the discussion of sky-high national debt is that the UK won't be the only one, far from it. So bondholders won't exactly be spoilt for choice. That in turn means that the UK government won't have to pay a large premium in terms of interest payments to finance that historic debt, provided that the deficit can be kept under control.
Well precisely. And once you've squashed the deficit then you can manage the debt via growth and interest payments and paying a keen eye on the deficit in future.
But there is a difficult reality. We went into the 08 crash with debt at 40% of GDP and a deficit of 3%. We go into this crisis with debt at 85% of GDP and a deficit of 1.2%. Meaning we are less well placed. An extra 45% on debt is a bigger drag than the 1.8% mitigating extra headroom on deficit.
Last time spending cuts took the strain - with almost everything bar the NHS squeezed until the pips squeaked. This was morally wrong because it hit the least well off very badly. It also means that in practice it cannot be done again. There's no scope. Our public realm is denuded.
What was missing in our response to 08 was tax hikes on the better off - by which I mean everyone who is doing more than "just about managing" or not managing at all. The need is for a contribution via taxation (focused more on wealth than income - but on both) which becomes sharply higher as you go up the scale of affluence. It should have happened long before now. I hope this abdication of political leadership and moral obligation is not continued.
When the Coalition was elected in 2010 I still got a personal allowance. I still got CB. I didn't have such restrictions on my pension contributions. I didn't have to pay extra for the privilege of living in Scotland. It is frankly ridiculous to say that tax on the higher earners was not increased substantially. My bill went up roughly £20k a year over that period which was about a 50% increase. The proportion of taxes paid by the highest earners went up sharply. That is as it should be and I am not complaining but this fantasy that Osborne was somehow protecting his rich friends whilst imposing harsh cuts on the poor is really nonsense.
Well he most certainly did impose harsh cuts which impacted the poor. And there was no serious attempt to tax the wealth (assets) of the affluent. Labour raised top rate income tax. He cut it. And the big picture choice was to load most of the pain onto public spending.
Not seeing much nonsense there, David. I'm seeing the truth. It's all on the public record.
The public record shows that the tax paid by the highest earners increased substantially which was the major cause of deficit reduction. When George talked about those with the broadest shoulders having to carry the load that was no more than the truth. Public spending was constrained but overall grew each year in real terms. There was also a much, much more aggressive searching for and accounting of overseas assets including new treaties with Switzerland. In focusing on wealth taxes you are painting a highly distorted picture.
But the fundamental problem he had to deal with was the loss of £100bn of taxes from financial services/banks. This did not recover quickly (in fact it still hasn't) which meant that spending and tax had to be brought into line at a new level. This is what is relevant for present purposes. If we permanently lose a large chunk of our tax paying economy because of the virus public spending and taxes will need to be brought into line again. If it is a short term hit with a strong bounce back much less action will be required.
But the Debt Interest arising from a higher deficit was very manageable - and was always well below what faced Chamberlain as Chancellor during the National Government back in the 1930s.
Yes, but debt needs to be rolled over so it affects the net cash requirement.
Indeed - but its burden - in terms of interest rates - was manageable when Osborne took over in 2010. Just as the impact of the Covid 19 virus can be treated as a 'one off' , many would say that the same was true of the GFC in 2008 . Moreover, the deficit was already declining by 2010 and it can be argued that the deflationary impact of Osborne's austerity was to delay the continued improvement in the Public Finances.
Well precisely. And once you've squashed the deficit then you can manage the debt via growth and interest payments and paying a keen eye on the deficit in future.
But there is a difficult reality. We went into the 08 crash with debt at 40% of GDP and a deficit of 3%. We go into this crisis with debt at 85% of GDP and a deficit of 1.2%. Meaning we are less well placed. An extra 45% on debt is a bigger drag than the 1.8% mitigating extra headroom on deficit.
Last time spending cuts took the strain - with almost everything bar the NHS squeezed until the pips squeaked. This was morally wrong because it hit the least well off very badly. It also means that in practice it cannot be done again. There's no scope. Our public realm is denuded.
What was missing in our response to 08 was tax hikes on the better off - by which I mean everyone who is doing more than "just about managing" or not managing at all. The need is for a contribution via taxation (focused more on wealth than income - but on both) which becomes sharply higher as you go up the scale of affluence. It should have happened long before now. I hope this abdication of political leadership and moral obligation is not continued.
No we are thankfully better placed now. That 1.8% difference in deficit is what matters massively more than the 45% on debt. Especially when much of that debt is owned by the Bank of England who would never call it in and don't demand interest on it either.
The deficit and interest payments are the two real elements which measure what we can afford not the debt.
Forget debt, we're never going to repay debt. We have to pay interest on debt - and the government bonds are frequently set to 30-50 year schedules so interest rate changes don't suddenly vary through to the budget.
We are going into this recession with interest being below 3% of government expenditure and the deficit being 1.2% of the government's budget. That's a lot healthier that we went into 2008 with.
What is a deficit? It is the amount by which debt is rising.
Why do we worry about a deficit? Because of its impact on debt.
So when discussing the public finances can we really "forget debt"?
Clearly not. Because if this were the case - that debt does not matter - then the thing which is causing the debt to increase would not matter either. This thing being the deficit.
No you have it backwards that is not why we worry about a deficit. We worry about a deficit because it means we are spending more than we are taking which is unsustainable, plus it leaves no headroom for changes if something goes wrong like happened in 2008.
Paying interest at 3% of our government expenditure is sustainable. Spending 4 pounds for every 3 pounds the government raises is not.
Come on Philip. Thinking cap.
If the absolute level of debt does not matter why should we worry about spending more than we take in? About the deficit? Answer - we shouldn't. Because it wouldn't matter a jot.
But you and I - and indeed all bar true esoterics - agree that the deficit DOES matter.
Why? Because if not controlled it leads to unsustainable DEBT. Which matters.
It is time for a clear and simple "Yes, I see now" and then we can continue.
*Facepalm*
An unsustainable deficit can indeed lead to unstainable debt, but how does stable debt without a deficit and with low interest lead to unsustainable debt?
It could if the economy is shrinking. This is not just an academic point. Italy is going from a very high debt level to a completely unsustainable one right now because their economy is shrinking.
Indeed plus deflation as we discussed in the last thread, the 1920 recession caused by the Spanish Flu slashed the UK economy by 20% in one year in nominal terms leading to 44% of government expenditure being interest payments and the UK economy didn't recover in nominal terms until WWII.
It didn't fall so much in real terms but in nominal terms it did which led to humungous interest payments.
Delusional. Team sport is over. Finished. Done. Forever. The last (legal) game of cricket in England was played last year.
My prediction: everything will be back to normal within 12 to 18 months.
Normal is now. You are experiencing it. You want a vision of your future? It's your four walls. It's on your computer screen. That's it. That is now the limit of your horizons until you die. This is your life.
Well precisely. And once you've squashed the deficit then you can manage the debt via growth and interest payments and paying a keen eye on the deficit in future.
But there is a difficult reality. We went into the 08 crash with debt at 40% of GDP and a deficit of 3%. We go into this crisis with debt at 85% of GDP and a deficit of 1.2%. Meaning we are less well placed. An extra 45% on debt is a bigger drag than the 1.8% mitigating extra headroom on deficit.
Last time spending cuts took the strain - with almost everything bar the NHS squeezed until the pips squeaked. This was morally wrong because it hit the least well off very badly. It also means that in practice it cannot be done again. There's no scope. Our public realm is denuded.
What was missing in our response to 08 was tax hikes on the better off - by which I mean everyone who is doing more than "just about managing" or not managing at all. The need is for a contribution via taxation (focused more on wealth than income - but on both) which becomes sharply higher as you go up the scale of affluence. It should have happened long before now. I hope this abdication of political leadership and moral obligation is not continued.
When the Coalition was elected in 2010 I still got a personal allowance. I still got CB. I didn't have such restrictions on my pension contributions. I didn't have to pay extra for the privilege of living in Scotland. It is frankly ridiculous to say that tax on the higher earners was not increased substantially. My bill went up roughly £20k a year over that period which was about a 50% increase. The proportion of taxes paid by the highest earners went up sharply. That is as it should be and I am not complaining but this fantasy that Osborne was somehow protecting his rich friends whilst imposing harsh cuts on the poor is really nonsense.
Well he most certainly did impose harsh cuts which impacted the poor. And there was no serious attempt to tax the wealth (assets) of the affluent. Labour raised top rate income tax. He cut it. And the big picture choice was to load most of the pain onto public spending.
Not seeing much nonsense there, David. I'm seeing the truth. It's all on the public record.
The public record shows that the tax paid by the highest earners increased substantially which was the major cause of deficit reduction. When George talked about those with the broadest shoulders having to carry the load that was no more than the truth. Public spending was constrained but overall grew each year in real terms. There was also a much, much more aggressive searching for and accounting of overseas assets including new treaties with Switzerland. In focusing on wealth taxes you are painting a highly distorted picture.
But the fundamental problem he had to deal with was the loss of £100bn of taxes from financial services/banks. This did not recover quickly (in fact it still hasn't) which meant that spending and tax had to be brought into line at a new level. This is what is relevant for present purposes. If we permanently lose a large chunk of our tax paying economy because of the virus public spending and taxes will need to be brought into line again. If it is a short term hit with a strong bounce back much less action will be required.
But the Debt Interest arising from a higher deficit was very manageable - and was always well below what faced Chamberlain as Chancellor during the National Government back in the 1930s.
Yes, but debt needs to be rolled over so it affects the net cash requirement.
Indeed - but its burden - in terms of interest rates - was manageable when Osborne took over in 2010. Just as the impact of the Covid 19 virus can be treated as a 'one off' , many would say that the same was true of the GFC in 2008 . Moreover, the deficit was already declining by 2010 and it can be argued that the deflationary impact of Osborne's austerity was to delay the continued improvement in the Public Finances.
It was not manageable when we had the deficit we had, interest rates were going up for nations that didn't bring those down and countries were going bust.
Delusional. Team sport is over. Finished. Done. Forever. The last (legal) game of cricket in England was played last year.
My prediction: everything will be back to normal within 12 to 18 months.
Normal is now. You are experiencing it. You want a vision of your future? It's your four walls. It's on your computer screen. That's it. That is now the limit of your horizons until you die. This is your life.
Delusional. Team sport is over. Finished. Done. Forever. The last (legal) game of cricket in England was played last year.
I think that is extremely pessimistic. But sports will probably need a vaccine. I am not sure this football season will start on time, for example.
The word you are looking for is "realistic". There is no vaccine. There will be no more football seasons. There will be no more team sports, drama, anything that involves groups of people. All that is gone forever. The Government needs to prepare people for that.
Delusional. Team sport is over. Finished. Done. Forever. The last (legal) game of cricket in England was played last year.
My prediction: everything will be back to normal within 12 to 18 months.
Normal is now. You are experiencing it. You want a vision of your future? It's your four walls. It's on your computer screen. That's it. That is now the limit of your horizons until you die. This is your life.
Are you usually this optimistic?
There's no point in kidding yourself with false hope.
I think that is extremely pessimistic. But sports will probably need a vaccine. I am not sure this football season will start on time, for example.
Should be possible to keep the players in a quarantine bubble, test them constantly, and hammer through the last remaining matches, 2 per week. Expensive and fiddly, but big financial consequences for not finishing major league seasons ....
Delusional. Team sport is over. Finished. Done. Forever. The last (legal) game of cricket in England was played last year.
I think that is extremely pessimistic. But sports will probably need a vaccine. I am not sure this football season will start on time, for example.
The word you are looking for is "realistic". There is no vaccine. There will be no more football seasons. There will be no more team sports, drama, anything that involves groups of people. All that is gone forever. The Government needs to prepare people for that.
Please, I can only take so much sunny optimism in one day.
Delusional. Team sport is over. Finished. Done. Forever. The last (legal) game of cricket in England was played last year.
My prediction: everything will be back to normal within 12 to 18 months.
Normal is now. You are experiencing it. You want a vision of your future? It's your four walls. It's on your computer screen. That's it. That is now the limit of your horizons until you die. This is your life.
Bizarre and surely bonkers on an upside vs downside calculation from Charles's POV, because how much extra cachet does this confer if you are already Duke of Rothesay and Lord of the Isles?
Well precisely. And once you've squashed the deficit then you can manage the debt via growth and interest payments and paying a keen eye on the deficit in future.
But there is a difficult reality. We went into the 08 crash with debt at 40% of GDP and a deficit of 3%. We go into this crisis with debt at 85% of GDP and a deficit of 1.2%. Meaning we are less well placed. An extra 45% on debt is a bigger drag than the 1.8% mitigating extra headroom on deficit.
Last time spending cuts took the strain - with almost everything bar the NHS squeezed until the pips squeaked. This was morally wrong because it hit the least well off very badly. It also means that in practice it cannot be done again. There's no scope. Our public realm is denuded.
What was missing in our response to 08 was tax hikes on the better off - by which I mean everyone who is doing more than "just about managing" or not managing at all. The need is for a contribution via taxation (focused more on wealth than income - but on both) which becomes sharply higher as you go up the scale of affluence. It should have happened long before now. I hope this abdication of political leadership and moral obligation is not continued.
No we are thankfully better placed now. That 1.8% difference in deficit is what matters massively more than the 45% on debt. Especially when much of that debt is owned by the Bank of England who would never call it in and don't demand interest on it either.
The deficit and interest payments are the two real elements which measure what we can afford not the debt.
Forget debt, we're never going to repay debt. We have to pay interest on debt - and the government bonds are frequently set to 30-50 year schedules so interest rate changes don't suddenly vary through to the budget.
We are going into this recession with interest being below 3% of government expenditure and the deficit being 1.2% of the government's budget. That's a lot healthier that we went into 2008 with.
What is a deficit? It is the amount by which debt is rising.
Why do we worry about a deficit? Because of its impact on debt.
So when discussing the public finances can we really "forget debt"?
Clearly not. Because if this were the case - that debt does not matter - then the thing which is causing the debt to increase would not matter either. This thing being the deficit.
decades and decades of experience tells us that essentially debt doesn't matter - provided the interest on it can be paid - as a lot of modern UK government debt is owed to the Bank of England it is east to imagine it is a problem that can be kicked into some very long grass indeed.
If the level of debt doesn't matter why does the size of the deficit matter?
Because if you look after the deficit, the debt will look after itself. If you don't look after the deficit, you can do very little to control the debt.
Sure. Many a mickle makes a mackle.
However if the size of accumulated debt doesn't matter you do not need to control it.
But of course you do need to control it. Because debt matters. Therefore deficits do. This is what I seek to demonstrate. Just this. I did not expect such resistance.
Delusional. Team sport is over. Finished. Done. Forever. The last (legal) game of cricket in England was played last year.
My prediction: everything will be back to normal within 12 to 18 months.
Normal is now. You are experiencing it. You want a vision of your future? It's your four walls. It's on your computer screen. That's it. That is now the limit of your horizons until you die. This is your life.
Delusional. Team sport is over. Finished. Done. Forever. The last (legal) game of cricket in England was played last year.
My prediction: everything will be back to normal within 12 to 18 months.
Normal is now. You are experiencing it. You want a vision of your future? It's your four walls. It's on your computer screen. That's it. That is now the limit of your horizons until you die. This is your life.
Are you usually this optimistic?
There's no point in kidding yourself with false hope.
If there really is no vaccine people will just learn to accept the higher risk of death until everyone has acquired herd immunity.
The other point to bear in mind in the discussion of sky-high national debt is that the UK won't be the only one, far from it. So bondholders won't exactly be spoilt for choice. That in turn means that the UK government won't have to pay a large premium in terms of interest payments to finance that historic debt, provided that the deficit can be kept under control.
Given that the additional debt is going to be monetised the government is going to pay no interest on it. The Bank pays the treasury interest on the gilts it holds.
Delusional. Team sport is over. Finished. Done. Forever. The last (legal) game of cricket in England was played last year.
My prediction: everything will be back to normal within 12 to 18 months.
Normal is now. You are experiencing it. You want a vision of your future? It's your four walls. It's on your computer screen. That's it. That is now the limit of your horizons until you die. This is your life.
On normal: during my entire professional career, people have been telling me that gilt yields are lower than normal. Gilt yields have been fairly steadily declining my entire professional career.
Normal is just what you expect from the past. It doesn't always hold good.
Delusional. Team sport is over. Finished. Done. Forever. The last (legal) game of cricket in England was played last year.
My prediction: everything will be back to normal within 12 to 18 months.
Normal is now. You are experiencing it. You want a vision of your future? It's your four walls. It's on your computer screen. That's it. That is now the limit of your horizons until you die. This is your life.
Delusional. Team sport is over. Finished. Done. Forever. The last (legal) game of cricket in England was played last year.
My prediction: everything will be back to normal within 12 to 18 months.
Normal is now. You are experiencing it. You want a vision of your future? It's your four walls. It's on your computer screen. That's it. That is now the limit of your horizons until you die. This is your life.
Delusional. Team sport is over. Finished. Done. Forever. The last (legal) game of cricket in England was played last year.
My prediction: everything will be back to normal within 12 to 18 months.
Normal is now. You are experiencing it. You want a vision of your future? It's your four walls. It's on your computer screen. That's it. That is now the limit of your horizons until you die. This is your life.
Are you usually this optimistic?
There's no point in kidding yourself with false hope.
I will say this once more and never again: please ring your GP, if only to rule out the possibility you are suffering from treatable depression.
Delusional. Team sport is over. Finished. Done. Forever. The last (legal) game of cricket in England was played last year.
I think that is extremely pessimistic. But sports will probably need a vaccine. I am not sure this football season will start on time, for example.
The word you are looking for is "realistic". There is no vaccine. There will be no more football seasons. There will be no more team sports, drama, anything that involves groups of people. All that is gone forever. The Government needs to prepare people for that.
Human societies have had team sports and social activities after the worst pandemics in history, human society simply won’t give those things up. You’re not winning a prize for melodrama and it makes things less serious than they are.
Well precisely. And once you've squashed the deficit then you can manage the debt via growth and interest payments and paying a keen eye on the deficit in future.
But there is a difficult reality. We went into the 08 crash with debt at 40% of GDP and a deficit of 3%. We go into this crisis with debt at 85% of GDP and a deficit of 1.2%. Meaning we are less well placed. An extra 45% on debt is a bigger drag than the 1.8% mitigating extra headroom on deficit.
Last time spending cuts took the strain - with almost everything bar the NHS squeezed until the pips squeaked. This was morally wrong because it hit the least well off very badly. It also means that in practice it cannot be done again. There's no scope. Our public realm is denuded.
What was missing in our response to 08 was tax hikes on the better off - by which I mean everyone who is doing more than "just about managing" or not managing at all. The need is for a contribution via taxation (focused more on wealth than income - but on both) which becomes sharply higher as you go up the scale of affluence. It should have happened long before now. I hope this abdication of political leadership and moral obligation is not continued.
No we are thankfully better placed now. That 1.8% difference in deficit is what matters massively more than the 45% on debt. Especially when much of that debt is owned by the Bank of England who would never call it in and don't demand interest on it either.
The deficit and interest payments are the two real elements which measure what we can afford not the debt.
Forget debt, we're never going to repay debt. We have to pay interest on debt - and the government bonds are frequently set to 30-50 year schedules so interest rate changes don't suddenly vary through to the budget.
We are going into this recession with interest being below 3% of government expenditure and the deficit being 1.2% of the government's budget. That's a lot healthier that we went into 2008 with.
What is a deficit? It is the amount by which debt is rising.
Why do we worry about a deficit? Because of its impact on debt.
So when discussing the public finances can we really "forget debt"?
Clearly not. Because if this were the case - that debt does not matter - then the thing which is causing the debt to increase would not matter either. This thing being the deficit.
decades and decades of experience tells us that essentially debt doesn't matter - provided the interest on it can be paid - as a lot of modern UK government debt is owed to the Bank of England it is east to imagine it is a problem that can be kicked into some very long grass indeed.
If the level of debt doesn't matter why does the size of the deficit matter?
Because if you look after the deficit, the debt will look after itself. If you don't look after the deficit, you can do very little to control the debt.
Sure. Many a mickle makes a mackle.
However if the size of accumulated debt doesn't matter you do not need to control it.
But of course you do need to control it. Because debt matters. Therefore deficits do. This is what I seek to demonstrate. Just this. I did not expect such resistance.
Your ability to pay your debts matters. That's interest payments, currently in the UK running at 3% of government expenditure.
If deficits are unsustainable you won't be able to pay your debts.
Delusional. Team sport is over. Finished. Done. Forever. The last (legal) game of cricket in England was played last year.
My prediction: everything will be back to normal within 12 to 18 months.
Normal is now. You are experiencing it. You want a vision of your future? It's your four walls. It's on your computer screen. That's it. That is now the limit of your horizons until you die. This is your life.
Are you usually this optimistic?
There's no point in kidding yourself with false hope.
If there really is no vaccine people will just learn to accept the higher risk of death until everyone has acquired herd immunity.
Well precisely. And once you've squashed the deficit then you can manage the debt via growth and interest payments and paying a keen eye on the deficit in future.
But there is a difficult reality. We went into the 08 crash with debt at 40% of GDP and a deficit of 3%. We go into this crisis with debt at 85% of GDP and a deficit of 1.2%. Meaning we are less well placed. An extra 45% on debt is a bigger drag than the 1.8% mitigating extra headroom on deficit.
Last time spending cuts took the strain - with almost everything bar the NHS squeezed until the pips squeaked. This was morally wrong because it hit the least well off very badly. It also means that in practice it cannot be done again. There's no scope. Our public realm is denuded.
What was missing in our response to 08 was tax hikes on the better off - by which I mean everyone who is doing more than "just about managing" or not managing at all. The need is for a contribution via taxation (focused more on wealth than income - but on both) which becomes sharply higher as you go up the scale of affluence. It should have happened long before now. I hope this abdication of political leadership and moral obligation is not continued.
When the Coalition was elected in 2010 I still got a personal allowance. I still got CB. I didn't have such restrictions on my pension contributions. I didn't have to pay extra for the privilege of living in Scotland. It is frankly ridiculous to say that tax on the higher earners was not increased substantially. My bill went up roughly £20k a year over that period which was about a 50% increase. The proportion of taxes paid by the highest earners went up sharply. That is as it should be and I am not complaining but this fantasy that Osborne was somehow protecting his rich friends whilst imposing harsh cuts on the poor is really nonsense.
Well he most certainly did impose harsh cuts which impacted the poor. And there was no serious attempt to tax the wealth (assets) of the affluent. Labour raised top rate income tax. He cut it. And the big picture choice was to load most of the pain onto public spending.
Not seeing much nonsense there, David. I'm seeing the truth. It's all on the public record.
The public record shows that the tax paid by the highest earners increased substantially which was the major cause of deficit reduction. When George talked about those with the broadest shoulders having to carry the load that was no more than the truth. Public spending was constrained but overall grew each year in real terms. There was also a much, much more aggressive searching for and accounting of overseas assets including new treaties with Switzerland. In focusing on wealth taxes you are painting a highly distorted picture.
But the fundamental problem he had to deal with was the loss of £100bn of taxes from financial services/banks. This did not recover quickly (in fact it still hasn't) which meant that spending and tax had to be brought into line at a new level. This is what is relevant for present purposes. If we permanently lose a large chunk of our tax paying economy because of the virus public spending and taxes will need to be brought into line again. If it is a short term hit with a strong bounce back much less action will be required.
But the Debt Interest arising from a higher deficit was very manageable - and was always well below what faced Chamberlain as Chancellor during the National Government back in the 1930s.
Yes, but debt needs to be rolled over so it affects the net cash requirement.
Indeed - but its burden - in terms of interest rates - was manageable when Osborne took over in 2010. Just as the impact of the Covid 19 virus can be treated as a 'one off' , many would say that the same was true of the GFC in 2008 . Moreover, the deficit was already declining by 2010 and it can be argued that the deflationary impact of Osborne's austerity was to delay the continued improvement in the Public Finances.
As I have said it depends on the cause of the deficit. If it is caused by a semi-permanent loss of tax revenues as happened in 2008 you need to respond to it with either higher taxes or lower spending or both. If things come back to normal fast then less action is required. This is the key to right now. My fear is that we are going to lose a significant part of our tax base and the economy will operate at a significantly lower level for some years. If that is the case then a repeat of the tough choices of 2010 awaits. If the OBR is right it probably doesn't.
Delusional. Team sport is over. Finished. Done. Forever. The last (legal) game of cricket in England was played last year.
I think that is extremely pessimistic. But sports will probably need a vaccine. I am not sure this football season will start on time, for example.
The word you are looking for is "realistic". There is no vaccine. There will be no more football seasons. There will be no more team sports, drama, anything that involves groups of people. All that is gone forever. The Government needs to prepare people for that.
Human societies have had team sports and social activities after the worst pandemics in history, human society simply won’t give those things up. You’re not winning a prize for melodrama and it makes things less serious than they are.
It's just frustrating to watch people merrily preparing for a future that won't happen. Sorry. I'll take the rest of the day off here.
Last time spending cuts took the strain - with almost everything bar the NHS squeezed until the pips squeaked... in practice it cannot be done again. There's no scope. Our public realm is denuded.
The NHS was squeezed in so far that the rapid rise in health spending relative to GDP ceased in the UK in contrast to other countries where it continued apace in response to rising demand, with the UK falling even further behind our neighbours.
In addition there was a lot of sleight of hand going on even to maintain the facade of no "real terms" spending cuts. One was to remove public health spending from the NHS financial envelope in 2013 by transferring the public health budget to local authorities under the coordination of a new executive agency. The government then proceeded to massacre local authority funding without any of those cuts registering as cuts to NHS funding.
So the newly created Public Health England suffered a budget cut of 40% without anyone really noticing. After all, it's a Cinderalla service outside of the public eye. What could possibly go wrong?
Delusional. Team sport is over. Finished. Done. Forever. The last (legal) game of cricket in England was played last year.
My prediction: everything will be back to normal within 12 to 18 months.
Normal is now. You are experiencing it. You want a vision of your future? It's your four walls. It's on your computer screen. That's it. That is now the limit of your horizons until you die. This is your life.
Are you usually this optimistic?
There's no point in kidding yourself with false hope.
If there really is no vaccine people will just learn to accept the higher risk of death until everyone has acquired herd immunity.
The Government won't let us.
Won't they? Compliance is already slipping and they aren't doing anything to stop it. They even changed one of the tests from no risk of a second peak, to no risk of an unmanageable second peak.
Well precisely. And once you've squashed the deficit then you can manage the debt via growth and interest payments and paying a keen eye on the deficit in future.
But there is a difficult reality. We went into the 08 crash with debt at 40% of GDP and a deficit of 3%. We go into this crisis with debt at 85% of GDP and a deficit of 1.2%. Meaning we are less well placed. An extra 45% on debt is a bigger drag than the 1.8% mitigating extra headroom on deficit.
Last time spending cuts took the strain - with almost everything bar the NHS squeezed until the pips squeaked. This was morally wrong because it hit the least well off very badly. It also means that in practice it cannot be done again. There's no scope. Our public realm is denuded.
What was missing in our response to 08 was tax hikes on the better off - by which I mean everyone who is doing more than "just about managing" or not managing at all. The need is for a contribution via taxation (focused more on wealth than income - but on both) which becomes sharply higher as you go up the scale of affluence. It should have happened long before now. I hope this abdication of political leadership and moral obligation is not continued.
When the Coalition was elected in 2010 I still got a personal allowance. I still got CB. I didn't have such restrictions on my pension contributions. I didn't have to pay extra for the privilege of living in Scotland. It is frankly ridiculous to say that tax on the higher earners was not increased substantially. My bill went up roughly £20k a year over that period which was about a 50% increase. The proportion of taxes paid by the highest earners went up sharply. That is as it should be and I am not complaining but this fantasy that Osborne was somehow protecting his rich friends whilst imposing harsh cuts on the poor is really nonsense.
Well he most certainly did impose harsh cuts which impacted the poor. And there was no serious attempt to tax the wealth (assets) of the affluent. Labour raised top rate income tax. He cut it. And the big picture choice was to load most of the pain onto public spending.
Not seeing much nonsense there, David. I'm seeing the truth. It's all on the public record.
The public record shows that the tax paid by the highest earners increased substantially which was the major cause of deficit reduction. When George talked about those with the broadest shoulders having to carry the load that was no more than the truth. Public spending was constrained but overall grew each year in real terms. There was also a much, much more aggressive searching for and accounting of overseas assets including new treaties with Switzerland. In focusing on wealth taxes you are painting a highly distorted picture.
But the fundamental problem he had to deal with was the loss of £100bn of taxes from financial services/banks. This did not recover quickly (in fact it still hasn't) which meant that spending and tax had to be brought into line at a new level. This is what is relevant for present purposes. If we permanently lose a large chunk of our tax paying economy because of the virus public spending and taxes will need to be brought into line again. If it is a short term hit with a strong bounce back much less action will be required.
But the Debt Interest arising from a higher deficit was very manageable - and was always well below what faced Chamberlain as Chancellor during the National Government back in the 1930s.
Yes, but debt needs to be rolled over so it affects the net cash requirement.
Indeed - but its burden - in terms of interest rates - was manageable when Osborne took over in 2010. Just as the impact of the Covid 19 virus can be treated as a 'one off' , many would say that the same was true of the GFC in 2008 . Moreover, the deficit was already declining by 2010 and it can be argued that the deflationary impact of Osborne's austerity was to delay the continued improvement in the Public Finances.
As I have said it depends on the cause of the deficit. If it is caused by a semi-permanent loss of tax revenues as happened in 2008 you need to respond to it with either higher taxes or lower spending or both. If things come back to normal fast then less action is required. This is the key to right now. My fear is that we are going to lose a significant part of our tax base and the economy will operate at a significantly lower level for some years. If that is the case then a repeat of the tough choices of 2010 awaits. If the OBR is right it probably doesn't.
100% agreed.
And draconian actions now to raise taxes etc would be more likely to feed the semi-permanent loss of tax revenues thus making matters worse. If anything a temporary tax cut while the economy comes off the floor would make more sense.
The other point to bear in mind in the discussion of sky-high national debt is that the UK won't be the only one, far from it. So bondholders won't exactly be spoilt for choice. That in turn means that the UK government won't have to pay a large premium in terms of interest payments to finance that historic debt, provided that the deficit can be kept under control.
Or, if you are a glass half empty type you might contemplate a world where governments worldwide are competing for a limited pot of savings and having to pay accordingly.
That's not just a statement about BAs operations, that's also a statement that BA thinks other airlines won't ne around to take their LHR slots back up again.
They think Virign is fucked.
Kinda solves the Heathrow runway issue for the foreseeable too.
Successive governments' long-grass kicking of the heathrow issue now looks masterful
Seriously though, don't you think that in five years (say, maybe much sooner) flights will be back where they were? Just with (some) different airlines? There will be a lot of cheap aeroplanes on offer and cheap spare capacity at airports making airline startups an attractive proposition, I guess.
Five years? Yes could see that more or less. Won’t be same set of airlines or shareholders in many cases of course, but if Virgin or Ryanair or whoever went bust, the planes and runways physically exist, so if demand returns they can be dusted off and away we go again, to massively simplify what would doubtless be a huge commercial and technical challenge to “dust off” an airline.
I think BA are being realistic and the likes of TUI only cancelling holidays up to mid June I think are not. Sunak is probably going to have to extend furloughs for catering, pubs, and travel industry for a longer period than June and even then taper its end as there is no way on earth I can see these sectors working as previously for a long while.
How is a restaurant with 50 covers viable with say only 20, and will enough people want to go anyway, pre vaccine/effective drugs, as opposed to cooking themselves or getting a couple of mates round for a takeaway when things are relaxed a bit?
I like what Paton is doing, and he certainly makes two very good points, that the daily data has a high variance (his approach smoothes this out) and a lag. I also like the clear message that hopsital covid deaths are definately decreasing. What I don't understand is why he is sticking with the NHS data, when the government has moved over to all covid deaths. Worldometers has updated their data retrospectively so that there wasn't a massive spike in the graph for yesterday.
The headline data isn't available by date of death only by date of reporting.
I don't agree with kinabalu on much, and arguments involving him are so much more enjoyable to read than the average internet argument that it makes me want to disagree with him more.
Delusional. Team sport is over. Finished. Done. Forever. The last (legal) game of cricket in England was played last year.
My prediction: everything will be back to normal within 12 to 18 months.
Normal is now. You are experiencing it. You want a vision of your future? It's your four walls. It's on your computer screen. That's it. That is now the limit of your horizons until you die. This is your life.
I suggest you get a job then.
I'm lucky enough to have one for now.
Then go and do it.
And if you can't then go for a walk or offer to pick fruit or something constructive.
The other point to bear in mind in the discussion of sky-high national debt is that the UK won't be the only one, far from it. So bondholders won't exactly be spoilt for choice. That in turn means that the UK government won't have to pay a large premium in terms of interest payments to finance that historic debt, provided that the deficit can be kept under control.
Or, if you are a glass half empty type you might contemplate a world where governments worldwide are competing for a limited pot of savings and having to pay accordingly.
If worst comes to the worst our government has a printing press available to compete with the savings pot. Most European nations do not.
I like what Paton is doing, and he certainly makes two very good points, that the daily data has a high variance (his approach smoothes this out) and a lag. I also like the clear message that hopsital covid deaths are definately decreasing. What I don't understand is why he is sticking with the NHS data, when the government has moved over to all covid deaths. Worldometers has updated their data retrospectively so that there wasn't a massive spike in the graph for yesterday.
The headline data isn't available by date of death only by date of reporting.
I've found his charts reassuring, he's done a great service. Reported deaths are much more jumpy.
The other point to bear in mind in the discussion of sky-high national debt is that the UK won't be the only one, far from it. So bondholders won't exactly be spoilt for choice. That in turn means that the UK government won't have to pay a large premium in terms of interest payments to finance that historic debt, provided that the deficit can be kept under control.
Or, if you are a glass half empty type you might contemplate a world where governments worldwide are competing for a limited pot of savings and having to pay accordingly.
We, along with many other Governments will just print money
Well precisely. And once you've squashed the deficit then you can manage the debt via growth and interest payments and paying a keen eye on the deficit in future.
But there is a difficult reality. We went into the 08 crash with debt at 40% of GDP and a deficit of 3%. We go into this crisis with debt at 85% of GDP and a deficit of 1.2%. Meaning we are less well placed. An extra 45% on debt is a bigger drag than the 1.8% mitigating extra headroom on deficit.
Last time spending cuts took the strain - with almost everything bar the NHS squeezed until the pips squeaked. This was morally wrong because it hit the least well off very badly. It also means that in practice it cannot be done again. There's no scope. Our public realm is denuded.
What was missing in our response to 08 was tax hikes on the better off - by which I mean everyone who is doing more than "just about managing" or not managing at all. The need is for a contribution via taxation (focused more on wealth than income - but on both) which becomes sharply higher as you go up the scale of affluence. It should have happened long before now. I hope this abdication of political leadership and moral obligation is not continued.
No we are thankfully better placed now. That 1.8% difference in deficit is what matters massively more than the 45% on debt. Especially when much of that debt is owned by the Bank of England who would never call it in and don't demand interest on it either.
The deficit and interest payments are the two real elements which measure what we can afford not the debt.
Forget debt, we're never going to repay debt. We have to pay interest on debt - and the government bonds are frequently set to 30-50 year schedules so interest rate changes don't suddenly vary through to the budget.
We are going into this recession with interest being below 3% of government expenditure and the deficit being 1.2% of the government's budget. That's a lot healthier that we went into 2008 with.
What is a deficit? It is the amount by which debt is rising.
Why do we worry about a deficit? Because of its impact on debt.
So when discussing the public finances can we really "forget debt"?
Clearly not. Because if this were the case - that debt does not matter - then the thing which is causing the debt to increase would not matter either. This thing being the deficit.
No you have it backwards that is not why we worry about a deficit. We worry about a deficit because it means we are spending more than we are taking which is unsustainable, plus it leaves no headroom for changes if something goes wrong like happened in 2008.
Paying interest at 3% of our government expenditure is sustainable. Spending 4 pounds for every 3 pounds the government raises is not.
Come on Philip. Thinking cap.
If the absolute level of debt does not matter why should we worry about spending more than we take in? About the deficit? Answer - we shouldn't. Because it wouldn't matter a jot.
But you and I - and indeed all bar true esoterics - agree that the deficit DOES matter.
Why? Because if not controlled it leads to unsustainable DEBT. Which matters.
It is time for a clear and simple "Yes, I see now" and then we can continue.
*Facepalm*
An unsustainable deficit can indeed lead to unstainable debt, but how does stable debt without a deficit and with low interest lead to unsustainable debt?
Exactly! We worry about a deficit because it can lead to unsustainable debt. Ergo the level of debt matters. If it did not matter, nor would deficits.
That took longer than it should have done but no matter.
Now then, next question and it's crux. If we were to phone up Rishi Sunak and ask him which of the following fiscal positions he would prefer going into this crisis -
(i) Debt at 40% of GDP and Deficit at 2.8% (ii) Debt at 85% of GDP and Deficit at 1.2%
Delusional. Team sport is over. Finished. Done. Forever. The last (legal) game of cricket in England was played last year.
My prediction: everything will be back to normal within 12 to 18 months.
Normal is now. You are experiencing it. You want a vision of your future? It's your four walls. It's on your computer screen. That's it. That is now the limit of your horizons until you die. This is your life.
Are you usually this optimistic?
There's no point in kidding yourself with false hope.
If there really is no vaccine people will just learn to accept the higher risk of death until everyone has acquired herd immunity.
The Government won't let us.
Sure they will, at some point. Or we won't let them. Where the debate needs to be is, where is that some point?
This is not a permanent state: either science delivers vaccines &/or therapeutics, or we suffer several waves of pandemic, and the world acquires sufficient herd immunity and/or the virus adapts to human hosts. In both cases, the world finds to a new normal in which all the social activities we have known come back, perhaps with some additional hygiene measures.
It looks pretty plausible, and if it is correct, then sitting in the audience at an opera, play, classical concert, or in the cinema, would be low risk. Performing in the orchestra: perhaps medium risk. Being in the choir on stage: high risk.
This is precisely the kind of distinction government scientists need to understand better.
And the mosh pit at a rock concert: book a month off work!
On normal: during my entire professional career, people have been telling me that gilt yields are lower than normal. Gilt yields have been fairly steadily declining my entire professional career.
Normal is just what you expect from the past. It doesn't always hold good.
I have been a pension trustee for about 6 years now and every year our actuaries have assured us that gilt rates had never been lower and this could not possibly last. I am not sure what we do about pension funds if they go negative as has already happened in some countries. At that point the funding requirement for a final salary scheme becomes almost infinite.
Delusional. Team sport is over. Finished. Done. Forever. The last (legal) game of cricket in England was played last year.
My prediction: everything will be back to normal within 12 to 18 months.
Normal is now. You are experiencing it. You want a vision of your future? It's your four walls. It's on your computer screen. That's it. That is now the limit of your horizons until you die. This is your life.
Are you usually this optimistic?
There's no point in kidding yourself with false hope.
I think you should watch a Bob Ross boxset to calm yourself down
Delusional. Team sport is over. Finished. Done. Forever. The last (legal) game of cricket in England was played last year.
My prediction: everything will be back to normal within 12 to 18 months.
Normal is now. You are experiencing it. You want a vision of your future? It's your four walls. It's on your computer screen. That's it. That is now the limit of your horizons until you die. This is your life.
Are you usually this optimistic?
There's no point in kidding yourself with false hope.
If there really is no vaccine people will just learn to accept the higher risk of death until everyone has acquired herd immunity.
The Government won't let us.
You and RobD have hit on the crux of the matter.
I hope Rob is right and you are wrong. I think that this government realises that freedoms must come back one way or another.
If you are still there Doug, resolve to retain your liberty to the max and turn a blind eye to the hectoring from authoritarian sorts who will no doubt plague us when lockdown is eased. That is what I plan to do. This is keeping me sane.
"Who could argue with this statement on coronavirus made by Australia’s prime minister, Scott Morrison, as pandemic rampages around the planet?
“This is a virus that has taken more than 200,000 lives across the world. It has shut down the global economy. The implications and impacts of this are extraordinary. Now it would seem entirely reasonable and sensible that the world would want to have an independent assessment of how all this occurred, so we can learn the lessons and prevent it from happening again.” The answer is simple: China. For this sensible suggestion was enough to drive Beijing into fury."
Well precisely. And once you've squashed the deficit then you can manage the debt via growth and interest payments and paying a keen eye on the deficit in future.
But there is a difficult reality. We went into the 08 crash with debt at 40% of GDP and a deficit of 3%. We go into this crisis with debt at 85% of GDP and a deficit of 1.2%. Meaning we are less well placed. An extra 45% on debt is a bigger drag than the 1.8% mitigating extra headroom on deficit.
Last time spending cuts took the strain - with almost everything bar the NHS squeezed until the pips squeaked. This was morally wrong because it hit the least well off very badly. It also means that in practice it cannot be done again. There's no scope. Our public realm is denuded.
What was missing in our response to 08 was tax hikes on the better off - by which I mean everyone who is doing more than "just about managing" or not managing at all. The need is for a contribution via taxation (focused more on wealth than income - but on both) which becomes sharply higher as you go up the scale of affluence. It should have happened long before now. I hope this abdication of political leadership and moral obligation is not continued.
No we are thankfully better placed now. That 1.8% difference in deficit is what matters massively more than the 45% on debt. Especially when much of that debt is owned by the Bank of England who would never call it in and don't demand interest on it either.
The deficit and interest payments are the two real elements which measure what we can afford not the debt.
Forget debt, we're never going to repay debt. We have to pay interest on debt - and the government bonds are frequently set to 30-50 year schedules so interest rate changes don't suddenly vary through to the budget.
We are going into this recession with interest being below 3% of government expenditure and the deficit being 1.2% of the government's budget. That's a lot healthier that we went into 2008 with.
What is a deficit? It is the amount by which debt is rising.
Why do we worry about a deficit? Because of its impact on debt.
So when discussing the public finances can we really "forget debt"?
Clearly not. Because if this were the case - that debt does not matter - then the thing which is causing the debt to increase would not matter either. This thing being the deficit.
No you have it backwards that is not why we worry about a deficit. We worry about a deficit because it means we are spending more than we are taking which is unsustainable, plus it leaves no headroom for changes if something goes wrong like happened in 2008.
Paying interest at 3% of our government expenditure is sustainable. Spending 4 pounds for every 3 pounds the government raises is not.
Come on Philip. Thinking cap.
If the absolute level of debt does not matter why should we worry about spending more than we take in? About the deficit? Answer - we shouldn't. Because it wouldn't matter a jot.
But you and I - and indeed all bar true esoterics - agree that the deficit DOES matter.
Why? Because if not controlled it leads to unsustainable DEBT. Which matters.
It is time for a clear and simple "Yes, I see now" and then we can continue.
*Facepalm*
An unsustainable deficit can indeed lead to unstainable debt, but how does stable debt without a deficit and with low interest lead to unsustainable debt?
Exactly! We worry about a deficit because it can lead to unsustainable debt. Ergo the level of debt matters. If it did not matter, nor would deficits.
That took longer than it should have done but no matter.
Now then, next question and it's crux. If we were to phone up Rishi Sunak and ask him which of the following fiscal positions he would prefer going into this crisis -
(i) Debt at 40% of GDP and Deficit at 2.8% (ii) Debt at 85% of GDP and Deficit at 1.2%
Delusional. Team sport is over. Finished. Done. Forever. The last (legal) game of cricket in England was played last year.
My prediction: everything will be back to normal within 12 to 18 months.
Normal is now. You are experiencing it. You want a vision of your future? It's your four walls. It's on your computer screen. That's it. That is now the limit of your horizons until you die. This is your life.
Are you usually this optimistic?
There's no point in kidding yourself with false hope.
I think you should watch a Bob Ross boxset to calm yourself down
Well precisely. And once you've squashed the deficit then you can manage the debt via growth and interest payments and paying a keen eye on the deficit in future.
But there is a difficult reality. We went into the 08 crash with debt at 40% of GDP and a deficit of 3%. We go into this crisis with debt at 85% of GDP and a deficit of 1.2%. Meaning we are less well placed. An extra 45% on debt is a bigger drag than the 1.8% mitigating extra headroom on deficit.
Last time spending cuts took the strain - with almost everything bar the NHS squeezed until the pips squeaked. This was morally wrong because it hit the least well off very badly. It also means that in practice it cannot be done again. There's no scope. Our public realm is denuded.
What was missing in our response to 08 was tax hikes on the better off - by which I mean everyone who is doing more than "just about managing" or not managing at all. The need is for a contribution via taxation (focused more on wealth than income - but on both) which becomes sharply higher as you go up the scale of affluence. It should have happened long before now. I hope this abdication of political leadership and moral obligation is not continued.
No we are thankfully better placed now. That 1.8% difference in deficit is what matters massively more than the 45% on debt. Especially when much of that debt is owned by the Bank of England who would never call it in and don't demand interest on it either.
The deficit and interest payments are the two real elements which measure what we can afford not the debt.
Forget debt, we're never going to repay debt. We have to pay interest on debt - and the government bonds are frequently set to 30-50 year schedules so interest rate changes don't suddenly vary through to the budget.
We are going into this recession with interest being below 3% of government expenditure and the deficit being 1.2% of the government's budget. That's a lot healthier that we went into 2008 with.
What is a deficit? It is the amount by which debt is rising.
Why do we worry about a deficit? Because of its impact on debt.
So when discussing the public finances can we really "forget debt"?
Clearly not. Because if this were the case - that debt does not matter - then the thing which is causing the debt to increase would not matter either. This thing being the deficit.
No you have it backwards that is not why we worry about a deficit. We worry about a deficit because it means we are spending more than we are taking which is unsustainable, plus it leaves no headroom for changes if something goes wrong like happened in 2008.
Paying interest at 3% of our government expenditure is sustainable. Spending 4 pounds for every 3 pounds the government raises is not.
Come on Philip. Thinking cap.
If the absolute level of debt does not matter why should we worry about spending more than we take in? About the deficit? Answer - we shouldn't. Because it wouldn't matter a jot.
But you and I - and indeed all bar true esoterics - agree that the deficit DOES matter.
Why? Because if not controlled it leads to unsustainable DEBT. Which matters.
It is time for a clear and simple "Yes, I see now" and then we can continue.
*Facepalm*
An unsustainable deficit can indeed lead to unstainable debt, but how does stable debt without a deficit and with low interest lead to unsustainable debt?
Exactly! We worry about a deficit because it can lead to unsustainable debt. Ergo the level of debt matters. If it did not matter, nor would deficits.
That took longer than it should have done but no matter.
Now then, next question and it's crux. If we were to phone up Rishi Sunak and ask him which of the following fiscal positions he would prefer going into this crisis -
(i) Debt at 40% of GDP and Deficit at 2.8% (ii) Debt at 85% of GDP and Deficit at 1.2%
Which would he choose and why?
Scenario 2. Any day.
Under normal circumstances debt would be going down in scenario (ii).
Delusional. Team sport is over. Finished. Done. Forever. The last (legal) game of cricket in England was played last year.
My prediction: everything will be back to normal within 12 to 18 months.
Normal is now. You are experiencing it. You want a vision of your future? It's your four walls. It's on your computer screen. That's it. That is now the limit of your horizons until you die. This is your life.
Well precisely. And once you've squashed the deficit then you can manage the debt via growth and interest payments and paying a keen eye on the deficit in future.
But there is a difficult reality. We went into the 08 crash with debt at 40% of GDP and a deficit of 3%. We go into this crisis with debt at 85% of GDP and a deficit of 1.2%. Meaning we are less well placed. An extra 45% on debt is a bigger drag than the 1.8% mitigating extra headroom on deficit.
Last time spending cuts took the strain - with almost everything bar the NHS squeezed until the pips squeaked. This was morally wrong because it hit the least well off very badly. It also means that in practice it cannot be done again. There's no scope. Our public realm is denuded.
What was missing in our response to 08 was tax hikes on the better off - by which I mean everyone who is doing more than "just about managing" or not managing at all. The need is for a contribution via taxation (focused more on wealth than income - but on both) which becomes sharply higher as you go up the scale of affluence. It should have happened long before now. I hope this abdication of political leadership and moral obligation is not continued.
No we are thankfully better placed now. That 1.8% difference in deficit is what matters massively more than the 45% on debt. Especially when much of that debt is owned by the Bank of England who would never call it in and don't demand interest on it either.
The deficit and interest payments are the two real elements which measure what we can afford not the debt.
Forget debt, we're never going to repay debt. We have to pay interest on debt - and the government bonds are frequently set to 30-50 year schedules so interest rate changes don't suddenly vary through to the budget.
We are going into this recession with interest being below 3% of government expenditure and the deficit being 1.2% of the government's budget. That's a lot healthier that we went into 2008 with.
What is a deficit? It is the amount by which debt is rising.
Why do we worry about a deficit? Because of its impact on debt.
So when discussing the public finances can we really "forget debt"?
Clearly not. Because if this were the case - that debt does not matter - then the thing which is causing the debt to increase would not matter either. This thing being the deficit.
No you have it backwards that is not why we worry about a deficit. We worry about a deficit because it means we are spending more than we are taking which is unsustainable, plus it leaves no headroom for changes if something goes wrong like happened in 2008.
Paying interest at 3% of our government expenditure is sustainable. Spending 4 pounds for every 3 pounds the government raises is not.
Come on Philip. Thinking cap.
If the absolute level of debt does not matter why should we worry about spending more than we take in? About the deficit? Answer - we shouldn't. Because it wouldn't matter a jot.
But you and I - and indeed all bar true esoterics - agree that the deficit DOES matter.
Why? Because if not controlled it leads to unsustainable DEBT. Which matters.
It is time for a clear and simple "Yes, I see now" and then we can continue.
*Facepalm*
An unsustainable deficit can indeed lead to unstainable debt, but how does stable debt without a deficit and with low interest lead to unsustainable debt?
Exactly! We worry about a deficit because it can lead to unsustainable debt. Ergo the level of debt matters. If it did not matter, nor would deficits.
That took longer than it should have done but no matter.
Now then, next question and it's crux. If we were to phone up Rishi Sunak and ask him which of the following fiscal positions he would prefer going into this crisis -
(i) Debt at 40% of GDP and Deficit at 2.8% (ii) Debt at 85% of GDP and Deficit at 1.2%
Which would he choose and why?
Scenario 2. Any day.
Under normal circumstances debt would be going down in scenario (ii).
Exactly, indebtedness would be falling fairly rapidly with ~4% nominal growth and a 1.2% deficit. Additionally, the issue with high debt levels is that the servicing costs form such a high proportion of annual spending that it's a drag on economic growth. The government is going to own around 35% of its own debt by the end of this crisis so it's not a huge concern.
That's not just a statement about BAs operations, that's also a statement that BA thinks other airlines won't ne around to take their LHR slots back up again.
They think Virign is fucked.
Good spot, British Airways must reckon they're the king of the ashes. What have you got Branson, what cards are you going to play.
How is Iberia looking. Have to remember that BA isn't flying solo anymore.
It is curious that IAG have only announced swingeing job cuts at BA, not Iberia or Aer Lingus - it does rather give the impression of BA trying to pull any government rug out from under the feet of Virgin!
Well precisely. And once you've squashed the deficit then you can manage the debt via growth and interest payments and paying a keen eye on the deficit in future.
But there is a difficult reality. We went into the 08 crash with debt at 40% of GDP and a deficit of 3%. We go into this crisis with debt at 85% of GDP and a deficit of 1.2%. Meaning we are less well placed. An extra 45% on debt is a bigger drag than the 1.8% mitigating extra headroom on deficit.
Last time spending cuts took the strain - with almost everything bar the NHS squeezed until the pips squeaked. This was morally wrong because it hit the least well off very badly. It also means that in practice it cannot be done again. There's no scope. Our public realm is denuded.
What was missing in our response to 08 was tax hikes on the better off - by which I mean everyone who is doing more than "just about managing" or not managing at all. The need is for a contribution via taxation (focused more on wealth than income - but on both) which becomes sharply higher as you go up the scale of affluence. It should have happened long before now. I hope this abdication of political leadership and moral obligation is not continued.
No we are thankfully better placed now. That 1.8% difference in deficit is what matters massively more than the 45% on debt. Especially when much of that debt is owned by the Bank of England who would never call it in and don't demand interest on it either.
The deficit and interest payments are the two real elements which measure what we can afford not the debt.
Forget debt, we're never going to repay debt. We have to pay interest on debt - and the government bonds are frequently set to 30-50 year schedules so interest rate changes don't suddenly vary through to the budget.
We are going into this recession with interest being below 3% of government expenditure and the deficit being 1.2% of the government's budget. That's a lot healthier that we went into 2008 with.
What is a deficit? It is the amount by which debt is rising.
Why do we worry about a deficit? Because of its impact on debt.
So when discussing the public finances can we really "forget debt"?
Clearly not. Because if this were the case - that debt does not matter - then the thing which is causing the debt to increase would not matter either. This thing being the deficit.
decades and decades of experience tells us that essentially debt doesn't matter - provided the interest on it can be paid - as a lot of modern UK government debt is owed to the Bank of England it is east to imagine it is a problem that can be kicked into some very long grass indeed.
If the level of debt doesn't matter why does the size of the deficit matter?
Because if you look after the deficit, the debt will look after itself. If you don't look after the deficit, you can do very little to control the debt.
Sure. Many a mickle makes a mackle.
However if the size of accumulated debt doesn't matter you do not need to control it.
But of course you do need to control it. Because debt matters. Therefore deficits do. This is what I seek to demonstrate. Just this. I did not expect such resistance.
Your ability to pay your debts matters. That's interest payments, currently in the UK running at 3% of government expenditure.
If deficits are unsustainable you won't be able to pay your debts.
Correct. What is unsustainable cannot be sustained.
But please focus on my question about "Sunak's choice".
On normal: during my entire professional career, people have been telling me that gilt yields are lower than normal. Gilt yields have been fairly steadily declining my entire professional career.
Normal is just what you expect from the past. It doesn't always hold good.
I have been a pension trustee for about 6 years now and every year our actuaries have assured us that gilt rates had never been lower and this could not possibly last. I am not sure what we do about pension funds if they go negative as has already happened in some countries. At that point the funding requirement for a final salary scheme becomes almost infinite.
Bond cycles tend to be incredibly long. There was a rising cycle that ran from just after the Second World War until the early 1980s, and then there has been a falling one since.
My view is that governments now think they can print and spend without consequence, and therefore (at some point) printing and spending is done not because of some major external crisis, but to get the economy moving just a little bit quicker.
And I think that inevitably leads to a bout of serious inflation at some point.
When? Couldn't tell you. Might be 2021, or 2025 or not until 2032. But it will come. And when it does, people owning 30 year gilts yielding 0.6% will lose *all* their money.
Well precisely. And once you've squashed the deficit then you can manage the debt via growth and interest payments and paying a keen eye on the deficit in future.
But there is a difficult reality. We went into the 08 crash with debt at 40% of GDP and a deficit of 3%. We go into this crisis with debt at 85% of GDP and a deficit of 1.2%. Meaning we are less well placed. An extra 45% on debt is a bigger drag than the 1.8% mitigating extra headroom on deficit.
Last time spending cuts took the strain - with almost everything bar the NHS squeezed until the pips squeaked. This was morally wrong because it hit the least well off very badly. It also means that in practice it cannot be done again. There's no scope. Our public realm is denuded.
What was missing in our response to 08 was tax hikes on the better off - by which I mean everyone who is doing more than "just about managing" or not managing at all. The need is for a contribution via taxation (focused more on wealth than income - but on both) which becomes sharply higher as you go up the scale of affluence. It should have happened long before now. I hope this abdication of political leadership and moral obligation is not continued.
No we are thankfully better placed now. That 1.8% difference in deficit is what matters massively more than the 45% on debt. Especially when much of that debt is owned by the Bank of England who would never call it in and don't demand interest on it either.
The deficit and interest payments are the two real elements which measure what we can afford not the debt.
Forget debt, we're never going to repay debt. We have to pay interest on debt - and the government bonds are frequently set to 30-50 year schedules so interest rate changes don't suddenly vary through to the budget.
We are going into this recession with interest being below 3% of government expenditure and the deficit being 1.2% of the government's budget. That's a lot healthier that we went into 2008 with.
What is a deficit? It is the amount by which debt is rising.
Why do we worry about a deficit? Because of its impact on debt.
So when discussing the public finances can we really "forget debt"?
Clearly not. Because if this were the case - that debt does not matter - then the thing which is causing the debt to increase would not matter either. This thing being the deficit.
No you have it backwards that is not why we worry about a deficit. We worry about a deficit because it means we are spending more than we are taking which is unsustainable, plus it leaves no headroom for changes if something goes wrong like happened in 2008.
Paying interest at 3% of our government expenditure is sustainable. Spending 4 pounds for every 3 pounds the government raises is not.
Come on Philip. Thinking cap.
If the absolute level of debt does not matter why should we worry about spending more than we take in? About the deficit? Answer - we shouldn't. Because it wouldn't matter a jot.
But you and I - and indeed all bar true esoterics - agree that the deficit DOES matter.
Why? Because if not controlled it leads to unsustainable DEBT. Which matters.
It is time for a clear and simple "Yes, I see now" and then we can continue.
*Facepalm*
An unsustainable deficit can indeed lead to unstainable debt, but how does stable debt without a deficit and with low interest lead to unsustainable debt?
Exactly! We worry about a deficit because it can lead to unsustainable debt. Ergo the level of debt matters. If it did not matter, nor would deficits.
That took longer than it should have done but no matter.
Now then, next question and it's crux. If we were to phone up Rishi Sunak and ask him which of the following fiscal positions he would prefer going into this crisis -
(i) Debt at 40% of GDP and Deficit at 2.8% (ii) Debt at 85% of GDP and Deficit at 1.2%
Which would he choose and why?
Scenario 2. Any day.
Under normal circumstances debt would be going down in scenario (ii).
That's not just a statement about BAs operations, that's also a statement that BA thinks other airlines won't ne around to take their LHR slots back up again.
They think Virign is fucked.
Good spot, British Airways must reckon they're the king of the ashes. What have you got Branson, what cards are you going to play.
How is Iberia looking. Have to remember that BA isn't flying solo anymore.
It is curious that IAG have only announced swingeing job cuts at BA, not Iberia or Aer Lingus - it does rather give the impression of BA trying to pull any government rug out from under the feet of Virgin!
The counter argument is that Virgin provides the international routes from Manchester.
If the Government wants a Northern Powerhouse it needs to keep that part of Virgin going or replace those flights with something else.
Delusional. Team sport is over. Finished. Done. Forever. The last (legal) game of cricket in England was played last year.
My prediction: everything will be back to normal within 12 to 18 months.
Normal is now. You are experiencing it. You want a vision of your future? It's your four walls. It's on your computer screen. That's it. That is now the limit of your horizons until you die. This is your life.
Rubbish, by this time next year everyone bar over 70s will be largely back to normal even without a vaccine with mass testing and tracing used to limit the virus spread.
People are not going to stop all life outside their bedroom and living room for a virus they have over a 99.5% chance of surviving if under 50 and over 90% if 50 to 70 and even most over 70s are far more likely to survive it than not
The other point to bear in mind in the discussion of sky-high national debt is that the UK won't be the only one, far from it. So bondholders won't exactly be spoilt for choice. That in turn means that the UK government won't have to pay a large premium in terms of interest payments to finance that historic debt, provided that the deficit can be kept under control.
Or, if you are a glass half empty type you might contemplate a world where governments worldwide are competing for a limited pot of savings and having to pay accordingly.
We, along with many other Governments will just print money
True. QE is the only realistic way out of this mess for all its risks. Which is why I worry about the EZ.
Well precisely. And once you've squashed the deficit then you can manage the debt via growth and interest payments and paying a keen eye on the deficit in future.
But there is a difficult reality. We went into the 08 crash with debt at 40% of GDP and a deficit of 3%. We go into this crisis with debt at 85% of GDP and a deficit of 1.2%. Meaning we are less well placed. An extra 45% on debt is a bigger drag than the 1.8% mitigating extra headroom on deficit.
Last time spending cuts took the strain - with almost everything bar the NHS squeezed until the pips squeaked. This was morally wrong because it hit the least well off very badly. It also means that in practice it cannot be done again. There's no scope. Our public realm is denuded.
What was missing in our response to 08 was tax hikes on the better off - by which I mean everyone who is doing more than "just about managing" or not managing at all. The need is for a contribution via taxation (focused more on wealth than income - but on both) which becomes sharply higher as you go up the scale of affluence. It should have happened long before now. I hope this abdication of political leadership and moral obligation is not continued.
No we are thankfully better placed now. That 1.8% difference in deficit is what matters massively more than the 45% on debt. Especially when much of that debt is owned by the Bank of England who would never call it in and don't demand interest on it either.
The deficit and interest payments are the two real elements which measure what we can afford not the debt.
Forget debt, we're never going to repay debt. We have to pay interest on debt - and the government bonds are frequently set to 30-50 year schedules so interest rate changes don't suddenly vary through to the budget.
We are going into this recession with interest being below 3% of government expenditure and the deficit being 1.2% of the government's budget. That's a lot healthier that we went into 2008 with.
What is a deficit? It is the amount by which debt is rising.
Why do we worry about a deficit? Because of its impact on debt.
So when discussing the public finances can we really "forget debt"?
Clearly not. Because if this were the case - that debt does not matter - then the thing which is causing the debt to increase would not matter either. This thing being the deficit.
No you have it backwards that is not why we worry about a deficit. We worry about a deficit because it means we are spending more than we are taking which is unsustainable, plus it leaves no headroom for changes if something goes wrong like happened in 2008.
Paying interest at 3% of our government expenditure is sustainable. Spending 4 pounds for every 3 pounds the government raises is not.
Come on Philip. Thinking cap.
If the absolute level of debt does not matter why should we worry about spending more than we take in? About the deficit? Answer - we shouldn't. Because it wouldn't matter a jot.
But you and I - and indeed all bar true esoterics - agree that the deficit DOES matter.
Why? Because if not controlled it leads to unsustainable DEBT. Which matters.
It is time for a clear and simple "Yes, I see now" and then we can continue.
*Facepalm*
An unsustainable deficit can indeed lead to unstainable debt, but how does stable debt without a deficit and with low interest lead to unsustainable debt?
Exactly! We worry about a deficit because it can lead to unsustainable debt. Ergo the level of debt matters. If it did not matter, nor would deficits.
That took longer than it should have done but no matter.
Now then, next question and it's crux. If we were to phone up Rishi Sunak and ask him which of the following fiscal positions he would prefer going into this crisis -
(i) Debt at 40% of GDP and Deficit at 2.8% (ii) Debt at 85% of GDP and Deficit at 1.2%
Which would he choose and why?
Ignoring the fact he couldn't choose (ii) would make it easier to bring the deficit back under control.
Historically an average deficit under 2.5 to 3% over the long term was considered acceptable because GDP growth and inflation would keep debt to GDP under control then. The problem with Brown is he hubristically thought boom and bust was broken which is why he was arrogantly running a 2.8% deficit so he had no room left to go when the recession came.
Let us imagine that this recession permanetly wipes out 5% of our tax base. In case (i) that means blowing the deficit out to 7.8% but in case (ii) it means blowing the deficit out to 6.2%. To bring the deficit back down safely to below 3% in case (i) means spending cuts or tax rises of 4.8% - to brink the deficit back down safely to below 3% in case (ii) means spending cuts or tax rises of 3.2%
Case (i) needs 50% more tax rises or spending cuts than case (ii) does.
That's without considering compound maths which we should all know the imporatance of by now.
Corona virus? A mere bagatelle. Consider 1918. no antivirals, no antibiotics, no vaccines and no hope. But as Humphrey Bogart said … we'll always have our face mask.
Delusional. Team sport is over. Finished. Done. Forever. The last (legal) game of cricket in England was played last year.
My prediction: everything will be back to normal within 12 to 18 months.
Normal is now. You are experiencing it. You want a vision of your future? It's your four walls. It's on your computer screen. That's it. That is now the limit of your horizons until you die. This is your life.
Rubbish, by this time next year everyone bar over 70s will be largely back to normal even without a vaccine with mass testing and tracing used to limit the virus spread.
People are not going to stop all life outside their bedroom and living room for a virus they have over a 99.5% chance of surviving if under 50 and over 90% if 50 to 70 and even most over 70s are far more likely to survive it than not
The thing is, HYUFD, your second paragraph encapsulates exactly what I thought right at the start of all this, before the lockdown was imposed.
Delusional. Team sport is over. Finished. Done. Forever. The last (legal) game of cricket in England was played last year.
My prediction: everything will be back to normal within 12 to 18 months.
Normal is now. You are experiencing it. You want a vision of your future? It's your four walls. It's on your computer screen. That's it. That is now the limit of your horizons until you die. This is your life.
Rubbish, by this time next year everyone bar over 70s will be largely back to normal even without a vaccine with mass testing and tracing used to limit the virus spread.
People are not going to stop all life outside their bedroom and living room for a virus they have over a 99.5% chance of surviving if under 50 and over 90% if 50 to 70 and even most over 70s are far more likely to survive it than not
A 1 in 10 chance of dying is not an incentive to return to normal.
That's not just a statement about BAs operations, that's also a statement that BA thinks other airlines won't ne around to take their LHR slots back up again.
They think Virign is fucked.
Good spot, British Airways must reckon they're the king of the ashes. What have you got Branson, what cards are you going to play.
How is Iberia looking. Have to remember that BA isn't flying solo anymore.
It is curious that IAG have only announced swingeing job cuts at BA, not Iberia or Aer Lingus - it does rather give the impression of BA trying to pull any government rug out from under the feet of Virgin!
The counter argument is that Virgin provides the international routes from Manchester.
If the Government wants a Northern Powerhouse it needs to keep that part of Virgin going or replace those flights with something else.
The routes, planes and slots will still exist, it will just be owned by someone other than Richard Branson. We shouldn't be bailing out shareholders, they've been taking dividends for years, now it's time to for them to recapitalise the companies they own.
On normal: during my entire professional career, people have been telling me that gilt yields are lower than normal. Gilt yields have been fairly steadily declining my entire professional career.
Normal is just what you expect from the past. It doesn't always hold good.
I have been a pension trustee for about 6 years now and every year our actuaries have assured us that gilt rates had never been lower and this could not possibly last. I am not sure what we do about pension funds if they go negative as has already happened in some countries. At that point the funding requirement for a final salary scheme becomes almost infinite.
So, are we are about to lose our pensions? Pretty scary to say the least. I am in final salary scheme (but not yet retired).
I think this goes on for a couple of years actually, the macaque data from the vaccine trial & South Korea non reinfection analysis out make me think a vaccine will be out - autumn 2021 is my provisional timeline for sufficient of the population to have it to facilitate herd immunity and THEN the big recovery begins. I'd be looking into a special class of bankruptcy for publicans if I was Rishi that'd be available without the normal non director penalties for those whose businesses clearly won't survive 'in the meantime' (Pubs, restaurants, hospitality). We should print, debase the currency to a certain degree and relend to those people once we're fully out the woods with a vaccine.
The other point to bear in mind in the discussion of sky-high national debt is that the UK won't be the only one, far from it. So bondholders won't exactly be spoilt for choice. That in turn means that the UK government won't have to pay a large premium in terms of interest payments to finance that historic debt, provided that the deficit can be kept under control.
Or, if you are a glass half empty type you might contemplate a world where governments worldwide are competing for a limited pot of savings and having to pay accordingly.
We, along with many other Governments will just print money
True. QE is the only realistic way out of this mess for all its risks. Which is why I worry about the EZ.
The inability for Italy, Greece and others to devalue their currencies to escape a crisis was the biggest reason I voted for Brexit.
I didn't want to be in the EU when those crises hit.
Well precisely. And once you've squashed the deficit then you can manage the debt via growth and interest payments and paying a keen eye on the deficit in future.
But there is a difficult reality. We went into the 08 crash with debt at 40% of GDP and a deficit of 3%. We go into this crisis with debt at 85% of GDP and a deficit of 1.2%. Meaning we are less well placed. An extra 45% on debt is a bigger drag than the 1.8% mitigating extra headroom on deficit.
Last time spending cuts took the strain - with almost everything bar the NHS squeezed until the pips squeaked. This was morally wrong because it hit the least well off very badly. It also means that in practice it cannot be done again. There's no scope. Our public realm is denuded.
What was missing in our response to 08 was tax hikes on the better off - by which I mean everyone who is doing more than "just about managing" or not managing at all. The need is for a contribution via taxation (focused more on wealth than income - but on both) which becomes sharply higher as you go up the scale of affluence. It should have happened long before now. I hope this abdication of political leadership and moral obligation is not continued.
No we are thankfully better placed now. That 1.8% difference in deficit is what matters massively more than the 45% on debt. Especially when much of that debt is owned by the Bank of England who would never call it in and don't demand interest on it either.
The deficit and interest payments are the two real elements which measure what we can afford not the debt.
Forget debt, we're never going to repay debt. We have to pay interest on debt - and the government bonds are frequently set to 30-50 year schedules so interest rate changes don't suddenly vary through to the budget.
We are going into this recession with interest being below 3% of government expenditure and the deficit being 1.2% of the government's budget. That's a lot healthier that we went into 2008 with.
What is a deficit? It is the amount by which debt is rising.
Why do we worry about a deficit? Because of its impact on debt.
So when discussing the public finances can we really "forget debt"?
Clearly not. Because if this were the case - that debt does not matter - then the thing which is causing the debt to increase would not matter either. This thing being the deficit.
No you have it backwards that is not why we worry about a deficit. We worry about a deficit because it means we are spending more than we are taking which is unsustainable, plus it leaves no headroom for changes if something goes wrong like happened in 2008.
Paying interest at 3% of our government expenditure is sustainable. Spending 4 pounds for every 3 pounds the government raises is not.
Come on Philip. Thinking cap.
If the absolute level of debt does not matter why should we worry about spending more than we take in? About the deficit? Answer - we shouldn't. Because it wouldn't matter a jot.
But you and I - and indeed all bar true esoterics - agree that the deficit DOES matter.
Why? Because if not controlled it leads to unsustainable DEBT. Which matters.
It is time for a clear and simple "Yes, I see now" and then we can continue.
*Facepalm*
An unsustainable deficit can indeed lead to unstainable debt, but how does stable debt without a deficit and with low interest lead to unsustainable debt?
Exactly! We worry about a deficit because it can lead to unsustainable debt. Ergo the level of debt matters. If it did not matter, nor would deficits.
That took longer than it should have done but no matter.
Now then, next question and it's crux. If we were to phone up Rishi Sunak and ask him which of the following fiscal positions he would prefer going into this crisis -
(i) Debt at 40% of GDP and Deficit at 2.8% (ii) Debt at 85% of GDP and Deficit at 1.2%
Which would he choose and why?
Scenario 2. Any day.
I didn't ask you! You're meant to be explaining why property taxes can't work because they reduce the value of the property.
But I must duck out for a haircut now. Wife is waving scissors at me.
The other point to bear in mind in the discussion of sky-high national debt is that the UK won't be the only one, far from it. So bondholders won't exactly be spoilt for choice. That in turn means that the UK government won't have to pay a large premium in terms of interest payments to finance that historic debt, provided that the deficit can be kept under control.
Or, if you are a glass half empty type you might contemplate a world where governments worldwide are competing for a limited pot of savings and having to pay accordingly.
We, along with many other Governments will just print money
True. QE is the only realistic way out of this mess for all its risks. Which is why I worry about the EZ.
The inability for Italy, Greece and others to devalue their currencies to escape a crisis was the biggest reason I voted for Brexit.
I didn't want to be in the EU when those crises hit.
Likely reason number one that HMG has for not postponing the exit date.
The other point to bear in mind in the discussion of sky-high national debt is that the UK won't be the only one, far from it. So bondholders won't exactly be spoilt for choice. That in turn means that the UK government won't have to pay a large premium in terms of interest payments to finance that historic debt, provided that the deficit can be kept under control.
Or, if you are a glass half empty type you might contemplate a world where governments worldwide are competing for a limited pot of savings and having to pay accordingly.
We, along with many other Governments will just print money
True. QE is the only realistic way out of this mess for all its risks. Which is why I worry about the EZ.
Delusional. Team sport is over. Finished. Done. Forever. The last (legal) game of cricket in England was played last year.
My prediction: everything will be back to normal within 12 to 18 months.
Normal is now. You are experiencing it. You want a vision of your future? It's your four walls. It's on your computer screen. That's it. That is now the limit of your horizons until you die. This is your life.
Are you usually this optimistic?
There's no point in kidding yourself with false hope.
I think you should watch a Bob Ross boxset to calm yourself down
Bob Ross boxset should be a treatment on the NHS.
He is now on TV twice, 7.00pm on BBC 4 and oddly at 7.50pm on the VICE channel (183 on Sky). It is by ten times the best show on TV.
Delusional. Team sport is over. Finished. Done. Forever. The last (legal) game of cricket in England was played last year.
My prediction: everything will be back to normal within 12 to 18 months.
Normal is now. You are experiencing it. You want a vision of your future? It's your four walls. It's on your computer screen. That's it. That is now the limit of your horizons until you die. This is your life.
Are you usually this optimistic?
There's no point in kidding yourself with false hope.
I think you should watch a Bob Ross boxset to calm yourself down
Bob Ross boxset should be a treatment on the NHS.
He is now on TV twice, 7.00pm on BBC 4 and oddly at 7.50pm on the VICE channel (183 on Sky). It is by ten times the best show on TV.
That's not just a statement about BAs operations, that's also a statement that BA thinks other airlines won't ne around to take their LHR slots back up again.
They think Virign is fucked.
Good spot, British Airways must reckon they're the king of the ashes. What have you got Branson, what cards are you going to play.
How is Iberia looking. Have to remember that BA isn't flying solo anymore.
It is curious that IAG have only announced swingeing job cuts at BA, not Iberia or Aer Lingus - it does rather give the impression of BA trying to pull any government rug out from under the feet of Virgin!
The counter argument is that Virgin provides the international routes from Manchester.
If the Government wants a Northern Powerhouse it needs to keep that part of Virgin going or replace those flights with something else.
The routes, planes and slots will still exist, it will just be owned by someone other than Richard Branson. We shouldn't be bailing out shareholders, they've been taking dividends for years, now it's time to for them to recapitalise the companies they own.
As I said, the routes need to be protected so someone runs them. And equally BA shouldn't be handed a monopoly.
That doesn't mean I believe in bailouts for companies that paid large dividends out (I'm looking especially at Easyjet there).
On normal: during my entire professional career, people have been telling me that gilt yields are lower than normal. Gilt yields have been fairly steadily declining my entire professional career.
Normal is just what you expect from the past. It doesn't always hold good.
I have been a pension trustee for about 6 years now and every year our actuaries have assured us that gilt rates had never been lower and this could not possibly last. I am not sure what we do about pension funds if they go negative as has already happened in some countries. At that point the funding requirement for a final salary scheme becomes almost infinite.
Bond cycles tend to be incredibly long. There was a rising cycle that ran from just after the Second World War until the early 1980s, and then there has been a falling one since.
My view is that governments now think they can print and spend without consequence, and therefore (at some point) printing and spending is done not because of some major external crisis, but to get the economy moving just a little bit quicker.
And I think that inevitably leads to a bout of serious inflation at some point.
When? Couldn't tell you. Might be 2021, or 2025 or not until 2032. But it will come. And when it does, people owning 30 year gilts yielding 0.6% will lose *all* their money.
I agree. On the other hand if we have the sort of deflation that @Philip_Thompson talked about in the 1920s they will be sitting very pretty. Faites vos jeux!
Well precisely. And once you've squashed the deficit then you can manage the debt via growth and interest payments and paying a keen eye on the deficit in future.
But there is a difficult reality. We went into the 08 crash with debt at 40% of GDP and a deficit of 3%. We go into this crisis with debt at 85% of GDP and a deficit of 1.2%. Meaning we are less well placed. An extra 45% on debt is a bigger drag than the 1.8% mitigating extra headroom on deficit.
Last time spending cuts took the strain - with almost everything bar the NHS squeezed until the pips squeaked. This was morally wrong because it hit the least well off very badly. It also means that in practice it cannot be done again. There's no scope. Our public realm is denuded.
What was missing in our response to 08 was tax hikes on the better off - by which I mean everyone who is doing more than "just about managing" or not managing at all. The need is for a contribution via taxation (focused more on wealth than income - but on both) which becomes sharply higher as you go up the scale of affluence. It should have happened long before now. I hope this abdication of political leadership and moral obligation is not continued.
No we are thankfully better placed now. That 1.8% difference in deficit is what matters massively more than the 45% on debt. Especially when much of that debt is owned by the Bank of England who would never call it in and don't demand interest on it either.
The deficit and interest payments are the two real elements which measure what we can afford not the debt.
Forget debt, we're never going to repay debt. We have to pay interest on debt - and the government bonds are frequently set to 30-50 year schedules so interest rate changes don't suddenly vary through to the budget.
We are going into this recession with interest being below 3% of government expenditure and the deficit being 1.2% of the government's budget. That's a lot healthier that we went into 2008 with.
What is a deficit? It is the amount by which debt is rising.
Why do we worry about a deficit? Because of its impact on debt.
So when discussing the public finances can we really "forget debt"?
Clearly not. Because if this were the case - that debt does not matter - then the thing which is causing the debt to increase would not matter either. This thing being the deficit.
No you have it backwards that is not why we worry about a deficit. We worry about a deficit because it means we are spending more than we are taking which is unsustainable, plus it leaves no headroom for changes if something goes wrong like happened in 2008.
Paying interest at 3% of our government expenditure is sustainable. Spending 4 pounds for every 3 pounds the government raises is not.
Come on Philip. Thinking cap.
If the absolute level of debt does not matter why should we worry about spending more than we take in? About the deficit? Answer - we shouldn't. Because it wouldn't matter a jot.
But you and I - and indeed all bar true esoterics - agree that the deficit DOES matter.
Why? Because if not controlled it leads to unsustainable DEBT. Which matters.
It is time for a clear and simple "Yes, I see now" and then we can continue.
*Facepalm*
An unsustainable deficit can indeed lead to unstainable debt, but how does stable debt without a deficit and with low interest lead to unsustainable debt?
Exactly! We worry about a deficit because it can lead to unsustainable debt. Ergo the level of debt matters. If it did not matter, nor would deficits.
That took longer than it should have done but no matter.
Now then, next question and it's crux. If we were to phone up Rishi Sunak and ask him which of the following fiscal positions he would prefer going into this crisis -
(i) Debt at 40% of GDP and Deficit at 2.8% (ii) Debt at 85% of GDP and Deficit at 1.2%
Which would he choose and why?
Scenario 2. Any day.
I didn't ask you! You're meant to be explaining why property taxes can't work because they reduce the value of the property.
But I must duck out for a haircut now. Wife is waving scissors at me.
It's quite simple really, assets hold value based on their returns, make the returns negative and the asset value drops, usually quite significantly.
That's not just a statement about BAs operations, that's also a statement that BA thinks other airlines won't ne around to take their LHR slots back up again.
They think Virign is fucked.
Good spot, British Airways must reckon they're the king of the ashes. What have you got Branson, what cards are you going to play.
How is Iberia looking. Have to remember that BA isn't flying solo anymore.
It is curious that IAG have only announced swingeing job cuts at BA, not Iberia or Aer Lingus - it does rather give the impression of BA trying to pull any government rug out from under the feet of Virgin!
The counter argument is that Virgin provides the international routes from Manchester.
If the Government wants a Northern Powerhouse it needs to keep that part of Virgin going or replace those flights with something else.
The routes, planes and slots will still exist, it will just be owned by someone other than Richard Branson. We shouldn't be bailing out shareholders, they've been taking dividends for years, now it's time to for them to recapitalise the companies they own.
As I said, the routes need to be protected so someone runs them. And equally BA shouldn't be handed a monopoly.
That doesn't mean I believe in bailouts for companies that paid large dividends out (I'm looking especially at Easyjet there).
Do you mean companies that paid dividends this year or previous years?
Companies can only pay dividends out of retained earnings from fully-taxed post-corporation tax profits which is the law. Companies that have paid dividends in previous years have done so because they had retained profits which they paid the Exchequer taxes on. That's not a bad thing.
Well precisely. And once you've squashed the deficit then you can manage the debt via growth and interest payments and paying a keen eye on the deficit in future.
But there is a difficult reality. We went into the 08 crash with debt at 40% of GDP and a deficit of 3%. We go into this crisis with debt at 85% of GDP and a deficit of 1.2%. Meaning we are less well placed. An extra 45% on debt is a bigger drag than the 1.8% mitigating extra headroom on deficit.
Last time spending cuts took the strain - with almost everything bar the NHS squeezed until the pips squeaked. This was morally wrong because it hit the least well off very badly. It also means that in practice it cannot be done again. There's no scope. Our public realm is denuded.
What was missing in our response to 08 was tax hikes on the better off - by which I mean everyone who is doing more than "just about managing" or not managing at all. The need is for a contribution via taxation (focused more on wealth than income - but on both) which becomes sharply higher as you go up the scale of affluence. It should have happened long before now. I hope this abdication of political leadership and moral obligation is not continued.
No we are thankfully better placed now. That 1.8% difference in deficit is what matters massively more than the 45% on debt. Especially when much of that debt is owned by the Bank of England who would never call it in and don't demand interest on it either.
The deficit and interest payments are the two real elements which measure what we can afford not the debt.
Forget debt, we're never going to repay debt. We have to pay interest on debt - and the government bonds are frequently set to 30-50 year schedules so interest rate changes don't suddenly vary through to the budget.
We are going into this recession with interest being below 3% of government expenditure and the deficit being 1.2% of the government's budget. That's a lot healthier that we went into 2008 with.
What is a deficit? It is the amount by which debt is rising.
Why do we worry about a deficit? Because of its impact on debt.
So when discussing the public finances can we really "forget debt"?
Clearly not. Because if this were the case - that debt does not matter - then the thing which is causing the debt to increase would not matter either. This thing being the deficit.
No you have it backwards that is not why we worry about a deficit. We worry about a deficit because it means we are spending more than we are taking which is unsustainable, plus it leaves no headroom for changes if something goes wrong like happened in 2008.
Paying interest at 3% of our government expenditure is sustainable. Spending 4 pounds for every 3 pounds the government raises is not.
Come on Philip. Thinking cap.
If the absolute level of debt does not matter why should we worry about spending more than we take in? About the deficit? Answer - we shouldn't. Because it wouldn't matter a jot.
But you and I - and indeed all bar true esoterics - agree that the deficit DOES matter.
Why? Because if not controlled it leads to unsustainable DEBT. Which matters.
It is time for a clear and simple "Yes, I see now" and then we can continue.
*Facepalm*
An unsustainable deficit can indeed lead to unstainable debt, but how does stable debt without a deficit and with low interest lead to unsustainable debt?
Exactly! We worry about a deficit because it can lead to unsustainable debt. Ergo the level of debt matters. If it did not matter, nor would deficits.
That took longer than it should have done but no matter.
Now then, next question and it's crux. If we were to phone up Rishi Sunak and ask him which of the following fiscal positions he would prefer going into this crisis -
(i) Debt at 40% of GDP and Deficit at 2.8% (ii) Debt at 85% of GDP and Deficit at 1.2%
Which would he choose and why?
Scenario 2. Any day.
I didn't ask you! You're meant to be explaining why property taxes can't work because they reduce the value of the property.
But I must duck out for a haircut now. Wife is waving scissors at me.
That's not just a statement about BAs operations, that's also a statement that BA thinks other airlines won't ne around to take their LHR slots back up again.
They think Virign is fucked.
Good spot, British Airways must reckon they're the king of the ashes. What have you got Branson, what cards are you going to play.
How is Iberia looking. Have to remember that BA isn't flying solo anymore.
It is curious that IAG have only announced swingeing job cuts at BA, not Iberia or Aer Lingus - it does rather give the impression of BA trying to pull any government rug out from under the feet of Virgin!
The counter argument is that Virgin provides the international routes from Manchester.
If the Government wants a Northern Powerhouse it needs to keep that part of Virgin going or replace those flights with something else.
The routes, planes and slots will still exist, it will just be owned by someone other than Richard Branson. We shouldn't be bailing out shareholders, they've been taking dividends for years, now it's time to for them to recapitalise the companies they own.
As I said, the routes need to be protected so someone runs them. And equally BA shouldn't be handed a monopoly.
That doesn't mean I believe in bailouts for companies that paid large dividends out (I'm looking especially at Easyjet there).
Do you mean companies that paid dividends this year or previous years?
Companies can only pay dividends out of retained earnings from fully-taxed post-corporation tax profits which is the law. Companies that have paid dividends in previous years have done so because they had retained profits which they paid the Exchequer taxes on. That's not a bad thing.
This year - Easyjet paid out £174m on March 22nd (edit to correct date)
Corona virus? A mere bagatelle. Consider 1918. no antivirals, no antibiotics, no vaccines and no hope. But as Humphrey Bogart said … we'll always have our face mask.
The one I am still pondering about is the Hong Kong flu of 1969/70. It killed roughly 3x what we have lost to date and didn't even interrupt the football season. Different times, different mores?
The other point to bear in mind in the discussion of sky-high national debt is that the UK won't be the only one, far from it. So bondholders won't exactly be spoilt for choice. That in turn means that the UK government won't have to pay a large premium in terms of interest payments to finance that historic debt, provided that the deficit can be kept under control.
Or, if you are a glass half empty type you might contemplate a world where governments worldwide are competing for a limited pot of savings and having to pay accordingly.
We, along with many other Governments will just print money
True. QE is the only realistic way out of this mess for all its risks. Which is why I worry about the EZ.
The inability for Italy, Greece and others to devalue their currencies to escape a crisis was the biggest reason I voted for Brexit.
I didn't want to be in the EU when those crises hit.
Likely reason number one that HMG has for not postponing the exit date.
Extending the transition during this crisis would be unthinkably stupid.
Corona virus? A mere bagatelle. Consider 1918. no antivirals, no antibiotics, no vaccines and no hope. But as Humphrey Bogart said … we'll always have our face mask.
The one I am still pondering about is the Hong Kong flu of 1969/70. It killed roughly 3x what we have lost to date and didn't even interrupt the football season. Different times, different mores?
I was 9 or 10 at the time and have no recollection of it at all.
Delusional. Team sport is over. Finished. Done. Forever. The last (legal) game of cricket in England was played last year.
My prediction: everything will be back to normal within 12 to 18 months.
Normal is now. You are experiencing it. You want a vision of your future? It's your four walls. It's on your computer screen. That's it. That is now the limit of your horizons until you die. This is your life.
Rubbish, by this time next year everyone bar over 70s will be largely back to normal even without a vaccine with mass testing and tracing used to limit the virus spread.
People are not going to stop all life outside their bedroom and living room
for a virus they have over a 99.5% chance of surviving if under 50 and over 90% if 50 to 70 and even most over 70s are far more likely to survive it than not
A 1 in 10 chance of dying is not an incentive to return to normal.
Fortunately for me (?!) it’s a bit better than 10% survival in your 50’s! However, I’m sure this group will modify behaviour - more eating in less eating out, less being in any crowd, less travel ( even if allowed). It will vary by individual but collectively it will add up, and these people have more spending power than 20 year olds.
The effect might even become magnified if a vaccine is found this summer, and we can then more or less time to within a few months when we’d get our shot in 2021. Carry on as normal and say have a 50% chance of catching it and a 2% chance of dying so a 1 in 50 risk, or stay in more or less till next spring reduce your chances of getting it to 10% and boost your odds to to 1 in 250? I think a lot would opt for a modified second option and so predictions of a V shaped recovery are “optimistic”.
That's not just a statement about BAs operations, that's also a statement that BA thinks other airlines won't ne around to take their LHR slots back up again.
They think Virign is fucked.
Good spot, British Airways must reckon they're the king of the ashes. What have you got Branson, what cards are you going to play.
How is Iberia looking. Have to remember that BA isn't flying solo anymore.
It is curious that IAG have only announced swingeing job cuts at BA, not Iberia or Aer Lingus - it does rather give the impression of BA trying to pull any government rug out from under the feet of Virgin!
The counter argument is that Virgin provides the international routes from Manchester.
If the Government wants a Northern Powerhouse it needs to keep that part of Virgin going or replace those flights with something else.
The routes, planes and slots will still exist, it will just be owned by someone other than Richard Branson. We shouldn't be bailing out shareholders, they've been taking dividends for years, now it's time to for them to recapitalise the companies they own.
As I said, the routes need to be protected so someone runs them. And equally BA shouldn't be handed a monopoly.
That doesn't mean I believe in bailouts for companies that paid large dividends out (I'm looking especially at Easyjet there).
Do you mean companies that paid dividends this year or previous years?
Companies can only pay dividends out of retained earnings from fully-taxed post-corporation tax profits which is the law. Companies that have paid dividends in previous years have done so because they had retained profits which they paid the Exchequer taxes on. That's not a bad thing.
This year - Easyjet paid out £174m on March 22nd (edit to correct date)
Wow. Zero sympathy for them then.
Are Easyjet still proceeding with their batshit crazy plans to pay top dollars to buy many more planes?
That's not just a statement about BAs operations, that's also a statement that BA thinks other airlines won't ne around to take their LHR slots back up again.
They think Virign is fucked.
Good spot, British Airways must reckon they're the king of the ashes. What have you got Branson, what cards are you going to play.
How is Iberia looking. Have to remember that BA isn't flying solo anymore.
It is curious that IAG have only announced swingeing job cuts at BA, not Iberia or Aer Lingus - it does rather give the impression of BA trying to pull any government rug out from under the feet of Virgin!
The counter argument is that Virgin provides the international routes from Manchester.
If the Government wants a Northern Powerhouse it needs to keep that part of Virgin going or replace those flights with something else.
The routes, planes and slots will still exist, it will just be owned by someone other than Richard Branson. We shouldn't be bailing out shareholders, they've been taking dividends for years, now it's time to for them to recapitalise the companies they own.
As I said, the routes need to be protected so someone runs them. And equally BA shouldn't be handed a monopoly.
That doesn't mean I believe in bailouts for companies that paid large dividends out (I'm looking especially at Easyjet there).
Do you mean companies that paid dividends this year or previous years?
Companies can only pay dividends out of retained earnings from fully-taxed post-corporation tax profits which is the law. Companies that have paid dividends in previous years have done so because they had retained profits which they paid the Exchequer taxes on. That's not a bad thing.
This year - Easyjet paid out £174m on March 22nd (edit to correct date)
Wow. Zero sympathy for them then.
Are Easyjet still proceeding with their batshit crazy plans to pay top dollars to buy many more planes?
Essentially yes. Stelios wants the board hung, drawn and quartered. I have to say I agree with him for the first time in a while.
Corona virus? A mere bagatelle. Consider 1918. no antivirals, no antibiotics, no vaccines and no hope. But as Humphrey Bogart said … we'll always have our face mask.
The one I am still pondering about is the Hong Kong flu of 1969/70. It killed roughly 3x what we have lost to date and didn't even interrupt the football season. Different times, different mores?
It was an era when many thousands of miners would die each year from lung problems acquired from their jobs and when road traffic deaths were nearly eight thousand per year:
The other point to bear in mind in the discussion of sky-high national debt is that the UK won't be the only one, far from it. So bondholders won't exactly be spoilt for choice. That in turn means that the UK government won't have to pay a large premium in terms of interest payments to finance that historic debt, provided that the deficit can be kept under control.
Or, if you are a glass half empty type you might contemplate a world where governments worldwide are competing for a limited pot of savings and having to pay accordingly.
We, along with many other Governments will just print money
True. QE is the only realistic way out of this mess for all its risks. Which is why I worry about the EZ.
The one I am still pondering about is the Hong Kong flu of 1969/70. It killed roughly 3x what we have lost to date and didn't even interrupt the football season. Different times, different mores?
The lockdown effect though - I read somewhere at least 500 million were infected by HK flu, while for covid a guesstimate might be 20/30 million so far.
I guess when it's not frontloaded with such a huge number of deaths shocking people, there's not much immediate pressure for heavy action .... so it spreads everywhere. We get boiled like the proverbial frog in a pan.
Delusional. Team sport is over. Finished. Done. Forever. The last (legal) game of cricket in England was played last year.
My prediction: everything will be back to normal within 12 to 18 months.
Normal is now. You are experiencing it. You want a vision of your future? It's your four walls. It's on your computer screen. That's it. That is now the limit of your horizons until you die. This is your life.
Are you usually this optimistic?
There's no point in kidding yourself with false hope.
I think you should watch a Bob Ross boxset to calm yourself down
Bob Ross boxset should be a treatment on the NHS.
He is now on TV twice, 7.00pm on BBC 4 and oddly at 7.50pm on the VICE channel (183 on Sky). It is by ten times the best show on TV.
And all over the YouTube.
There is something incredibly soothing about it.
I find the prospect of a cack painting at the end of it quite stressful.
That's not just a statement about BAs operations, that's also a statement that BA thinks other airlines won't ne around to take their LHR slots back up again.
They think Virign is fucked.
Good spot, British Airways must reckon they're the king of the ashes. What have you got Branson, what cards are you going to play.
How is Iberia looking. Have to remember that BA isn't flying solo anymore.
It is curious that IAG have only announced swingeing job cuts at BA, not Iberia or Aer Lingus - it does rather give the impression of BA trying to pull any government rug out from under the feet of Virgin!
The counter argument is that Virgin provides the international routes from Manchester.
If the Government wants a Northern Powerhouse it needs to keep that part of Virgin going or replace those flights with something else.
The routes, planes and slots will still exist, it will just be owned by someone other than Richard Branson. We shouldn't be bailing out shareholders, they've been taking dividends for years, now it's time to for them to recapitalise the companies they own.
As I said, the routes need to be protected so someone runs them. And equally BA shouldn't be handed a monopoly.
That doesn't mean I believe in bailouts for companies that paid large dividends out (I'm looking especially at Easyjet there).
Do you mean companies that paid dividends this year or previous years?
Companies can only pay dividends out of retained earnings from fully-taxed post-corporation tax profits which is the law. Companies that have paid dividends in previous years have done so because they had retained profits which they paid the Exchequer taxes on. That's not a bad thing.
This year - Easyjet paid out £174m on March 22nd (edit to correct date)
Wow. Zero sympathy for them then.
Are Easyjet still proceeding with their batshit crazy plans to pay top dollars to buy many more planes?
Essentially yes. Stelios wants the board hung, drawn and quartered. I have to say I agree with him for the first time in a while.
Can he not call a motion of no confidence in the entire board?
Comments
https://twitter.com/BBCScotlandNews/status/1255794476607590401?s=20
It didn't fall so much in real terms but in nominal terms it did which led to humungous interest payments.
How was that manageable?
However if the size of accumulated debt doesn't matter you do not need to control it.
But of course you do need to control it. Because debt matters. Therefore deficits do. This is what I seek to demonstrate. Just this. I did not expect such resistance.
Normal is just what you expect from the past. It doesn't always hold good.
And I am sorry you are having such a rough time.
If deficits are unsustainable you won't be able to pay your debts.
In addition there was a lot of sleight of hand going on even to maintain the facade of no "real terms" spending cuts. One was to remove public health spending from the NHS financial envelope in 2013 by transferring the public health budget to local authorities under the coordination of a new executive agency. The government then proceeded to massacre local authority funding without any of those cuts registering as cuts to NHS funding.
So the newly created Public Health England suffered a budget cut of 40% without anyone really noticing. After all, it's a Cinderalla service outside of the public eye. What could possibly go wrong?
And draconian actions now to raise taxes etc would be more likely to feed the semi-permanent loss of tax revenues thus making matters worse. If anything a temporary tax cut while the economy comes off the floor would make more sense.
I think BA are being realistic and the likes of TUI only cancelling holidays up to mid June I think are not. Sunak is probably going to have to extend furloughs for catering, pubs, and travel industry for a longer period than June and even then taper its end as there is no way on earth I can see these sectors working as previously for a long while.
How is a restaurant with 50 covers viable with say only 20, and will enough people want to go anyway, pre vaccine/effective drugs, as opposed to cooking themselves or getting a couple of mates round for a takeaway when things are relaxed a bit?
https://twitter.com/IndpndtLiv/status/1255842476776095744?s=20
And it was really fcuking weird already.
And if you can't then go for a walk or offer to pick fruit or something constructive.
https://twitter.com/jburnmurdoch/status/1255865248839499776
That took longer than it should have done but no matter.
Now then, next question and it's crux. If we were to phone up Rishi Sunak and ask him which of the following fiscal positions he would prefer going into this crisis -
(i) Debt at 40% of GDP and Deficit at 2.8%
(ii) Debt at 85% of GDP and Deficit at 1.2%
Which would he choose and why?
This is not a permanent state: either science delivers vaccines &/or therapeutics, or we suffer several waves of pandemic, and the world acquires sufficient herd immunity and/or the virus adapts to human hosts. In both cases, the world finds to a new normal in which all the social activities we have known come back, perhaps with some additional hygiene measures.
I hope Rob is right and you are wrong. I think that this government realises that freedoms must come back one way or another.
If you are still there Doug, resolve to retain your liberty to the max and turn a blind eye to the hectoring from authoritarian sorts who will no doubt plague us when lockdown is eased. That is what I plan to do. This is keeping me sane.
“This is a virus that has taken more than 200,000 lives across the world. It has shut down the global economy. The implications and impacts of this are extraordinary. Now it would seem entirely reasonable and sensible that the world would want to have an independent assessment of how all this occurred, so we can learn the lessons and prevent it from happening again.” The answer is simple: China. For this sensible suggestion was enough to drive Beijing into fury."
https://unherd.com/2020/04/the-world-must-stand-up-to-chinas-bullies/
But please focus on my question about "Sunak's choice".
My view is that governments now think they can print and spend without consequence, and therefore (at some point) printing and spending is done not because of some major external crisis, but to get the economy moving just a little bit quicker.
And I think that inevitably leads to a bout of serious inflation at some point.
When? Couldn't tell you. Might be 2021, or 2025 or not until 2032. But it will come. And when it does, people owning 30 year gilts yielding 0.6% will lose *all* their money.
If the Government wants a Northern Powerhouse it needs to keep that part of Virgin going or replace those flights with something else.
People are not going to stop all life outside their bedroom and living room for a virus they have over a 99.5% chance of surviving if under 50 and over 90% if 50 to 70 and even most over 70s are far more likely to survive it than not
Historically an average deficit under 2.5 to 3% over the long term was considered acceptable because GDP growth and inflation would keep debt to GDP under control then. The problem with Brown is he hubristically thought boom and bust was broken which is why he was arrogantly running a 2.8% deficit so he had no room left to go when the recession came.
Let us imagine that this recession permanetly wipes out 5% of our tax base. In case (i) that means blowing the deficit out to 7.8% but in case (ii) it means blowing the deficit out to 6.2%. To bring the deficit back down safely to below 3% in case (i) means spending cuts or tax rises of 4.8% - to brink the deficit back down safely to below 3% in case (ii) means spending cuts or tax rises of 3.2%
Case (i) needs 50% more tax rises or spending cuts than case (ii) does.
That's without considering compound maths which we should all know the imporatance of by now.
Consider 1918. no antivirals, no antibiotics, no vaccines and no hope. But as Humphrey Bogart said … we'll always have our face mask.
I'd be looking into a special class of bankruptcy for publicans if I was Rishi that'd be available without the normal non director penalties for those whose businesses clearly won't survive 'in the meantime' (Pubs, restaurants, hospitality). We should print, debase the currency to a certain degree and relend to those people once we're fully out the woods with a vaccine.
I didn't want to be in the EU when those crises hit.
But I must duck out for a haircut now. Wife is waving scissors at me.
There is something incredibly soothing about it.
That doesn't mean I believe in bailouts for companies that paid large dividends out (I'm looking especially at Easyjet there).
Companies can only pay dividends out of retained earnings from fully-taxed post-corporation tax profits which is the law. Companies that have paid dividends in previous years have done so because they had retained profits which they paid the Exchequer taxes on. That's not a bad thing.
https://www.theguardian.com/world/2020/apr/30/coronavirus-scientists-caution-against-reopening-schools
The effect might even become magnified if a vaccine is found this summer, and we can then more or less time to within a few months when we’d get our shot in 2021. Carry on as normal and say have a 50% chance of catching it and a 2% chance of dying so a 1 in 50 risk, or stay in more or less till next spring reduce your chances of getting it to 10% and boost your odds to to 1 in 250? I think a lot would opt for a modified second option and so predictions of a V shaped recovery are “optimistic”.
Are Easyjet still proceeding with their batshit crazy plans to pay top dollars to buy many more planes?
https://en.wikipedia.org/wiki/Reported_Road_Casualties_Great_Britain
Going for a run now.
I guess when it's not frontloaded with such a huge number of deaths shocking people, there's not much immediate pressure for heavy action .... so it spreads everywhere. We get boiled like the proverbial frog in a pan.