Reply to: Alistair Darling admits post election spending cuts worse than the 80s

[doodab]

Alistair Darling has conceded that if Labour is re-elected public spending cuts will be "tougher and deeper" than those implemented by Margaret Thatcher.

Isn't this just the same as saying the pre-election mismanagement and overspending has been even worse than it was under the last labour government?

More fat means deeper cuts, but we get back to the same baseline.

[PAH]

Saw the following article this morning.

Seems to me that being a dole/benefits scrounger is looking the smart move for the next xx number of years. Anyone with income, assetts, or savings will be taxed to death while still paying for the scroungers and public service cuts, or am I being pessimistic?


http://money.uk.msn.com/budget2010/a...ntid=152754595

The deficit - the amount the government is overspending this year - will clock in at £167 billion. That's £11 billion less than expected. But it's still £167 billion.

That is a staggering number. And it'll stay above £160 billion for the next two years at least.

Let's just get a bit of clarity on that. What this means is that this year, another £160 billion-odd gets added to our national debt. The same again the year after and the year after that.

Even by 2014/15, and assuming that Darling's predictions are right, the government will still be spending £74 billion a year more than it's making annually in tax.

That'll take our national debt from £617 billion right up to £1.406 trillion by 2014/15. And at that point, our deficit - the annual overspend - will still be at 4% of GDP.

For some perspective on that, to join the eurozone an overspend of 3% was seen as the ceiling. Of course, most countries didn't manage that, but it just gives you a benchmark as to what is seen as a sustainable level of government overspend.

How will we pay for the borrowing? Well we've done it so far, haven't we?

Yes, but we had the Bank of England buying our debt then. The net sales of government gilts are expected to fall to £148 billion in 2010/11 from £211 billion in 2009/10. But the Bank of England bought all but £28 billion of that this year.

In 2010/11, private buyers will have to pick up all that slack themselves. Will they do it? Perhaps not at current prices. That would push up the interest bill and, in turn, make the scale of our borrowing even larger.

[Mich the Tester]

Britain is on the brink of losing its triple A credit rating.

By talking "tough" it keeps the credit rating agencies quiet (for now).

Indeed Mr DP, but there are many millions of voters who have no idea what the consequences are if a country loses that triple A rating and don't understand why their jobs will be on the line when it happens.

[The_Equalizer]

My Uncle buys and reconditions switchgear. It mostly gets sent out to India and the like. He mentioned only a couple of weeks ago that both the buildings and the switchgear housed in them are far better built than their replacements.

[threaded]

In the '70s, the last time there were regular power cuts, the National Grid was still using beautifully made and over-engineered high-voltage parts from the 30s with a lifetime of 60 years or more.

But over the last ten years or so, many of these have been replaced by cheap tacky parts with a much shorter lifetime and less robustness to withstand repeated power cuts.

So these days if the lights start going off regularly, one of those times they may just stay off for days or even weeks, while the gear has to be replaced.

Correct. You've even witnessed it over the winter. In some outlying areas the reason the power didn't come back on for days was because they had to replace entire runs, and the switch-gear. I heard one place tripped so many times the station ran out of SF6 and the managers kept telling the the Engineers to switch it back on, threatening one with a P45. That'll have cost...

[TimberWolf]

It's not as if we are in a good position to borrow our way out of the coming worst part of the recession either

[OwlHoot]

Imagine the current generation putting up with lights out at 10pm. ..

In the '70s, the last time there were regular power cuts, the National Grid was still using beautifully made and over-engineered high-voltage parts from the 30s with a lifetime of 60 years or more.

But over the last ten years or so, many of these have been replaced by cheap tacky parts with a much shorter lifetime and less robustness to withstand repeated power cuts.

So these days if the lights start going off regularly, one of those times they may just stay off for days or even weeks, while the gear has to be replaced.

[Pickle2]

And what do you think happens if, as you suggest, we decrease our imports? If devaluing were as good as you say, we'd be forever at it. Just print money. And of course agencies lending us vast amounts of money won't be too keen on being paid a low interest rate on a weakening currency. At some stage the risk must be that a slide backed up with smoke and mirrors and tough talk, turns into an avalanche.

Hey, I didnt say it was particularly good, but is perhapsthe best worst option on the table right now. Everyone is chasing a competitive devaluation.

[The_Equalizer]

Retraction:

Bugger, we really are skint.

[The_Equalizer]

Definately the most honest chancellor we've had in the past decade...

Very good!

[centurian]

Definately the most honest chancellor we've had in the past decade...

[fullyautomatix]

No one has any idea of the problem. We are nowhere near anything like the three day week. They're would probably be social meltdown well before that. Imagine the current generation putting up with lights out at 10pm. Dear Britannia needs a right good kick up the arse.

A social unrest might just be the medicine this country needs.

The current generation have had it too easy courtesy the biggest debt bubble for a generation.

[The_Equalizer]

Argh... I might just like Darling:

BBC News - Darling concedes cuts could be tougher than 1980s

[The_Equalizer]

No one has any idea of the problem. We are nowhere near anything like the three day week. There would probably be social meltdown well before that. Imagine the current generation putting up with lights out at 10pm. Dear Britannia needs a right good kick up the arse.

[Gonzo]

As to what Darling is up to.

He is still quite young for a career politician, 56, and could easily see through another two or three parliaments so I suppose that it is possible that he is trying to rehabilitate his reputation to keep his future career options open.