Liberal Media Begin To attack Liberals.

[Rupert_Baehr]

The sad thing is that the Libs may not be performing a valuable role in opposing these cuts. They're complicit.

 

Surely none of the partners in any coalition government is/are a part of the opposition? Presumably the Libbys have a say in private and perhaps the things they say do have an effect on the final decision, but once policy has been agreed, then (in public anyway) they're pretty much obliged to show a united face.

[I1L2T3]

If you search one of the web pages of the online newspapers you should be able to get some figures. AFAIR, Darling was promising 'to reduce the budget deficit by 50% within the life of [this] Parliament.'

 

If that was a linear reduction (though given that he stated that his plans for reductions in public spending would be less in the first year to allow the economy to recover it would not have been a linear reduction,) then Labour planned find an additional sum of something like £20 Billion [or more] per year (the predicted budget deficit was about £165 billion, so 50% would have required an annual reduction of £16.5 billion, but there's the (not-so) small matter of the interest due on the existing amount owed and the interest due on all the borrowing during the life of the Parliament.)

 

Finding £20 Billion extra each year for deficit reduction would've been fairly impressive; it may not be so far wide of the mark to suggest that Labour had planned to do more to reduce the deficit than had any previous government - particularly as Labour dug a deeper hole than did any previous government.

 

(This article is a few months old, but IMO it's still worth looking at.)

 

Government debt is held largely in low yield long-term bonds. A very astute move by the previous government that the Tories don't like to tell you about.

 

About 15-20% of government borrowing is actually provided by UK citizens through NS&I products, a massive proportion of that in a product with effectively no expiry - Premium Bonds. If you're worried you could do your bit to help the government borrow by purchasing some NS&I products.

[I1L2T3]

Surely none of the partners in any coalition government is/are a part of the opposition? Presumably the Libbys have a say in private and perhaps the things they say do have an effect on the final decision, but once policy has been agreed, then (in public anyway) they're pretty much obliged to show a united face.

 

Indeed. We will find out on Tuesday just how effective they've been.

[Rupert_Baehr]

Government debt is held largely in low yield long-term bonds. A very astute move by the previous government that the Tories don't like to tell you about.

 

They shouldn't need to tell you about that ... it's hardly new.

 

The interest rate is set at the time the bond is offered for sale, but like all bonds, the effective interest rate changes in the secondary market. - If the Bank of England's interest rate falls, the trading price of the bond rises and if the Bank's rate rises, the trading price falls.

 

The government can set a price in the primary market, but if the buyers decline to buy at that price, then the government will have to think again. If buyers feel that the economy is liable to suffer from inflation and/or the value of the pound is likely to decrease, they will be less willing to buy. During the early part of this year, buyers' concern forced the government to insure the value of the bond - an additional cost of borrowing.

 

Should the country lose its triple-A rating, then the interest offered in the primary market will have to be higher to persuade potential purchasers to buy. Government Bonds are the only security a trader can describe as 'safe' and they are safe because they are backed by 'the full faith and credit' of the government.

 

About 15-20% of government borrowing is actually provided by UK citizens through NS&I products, a massive proportion of that in a product with effectively no expiry - Premium Bonds. If you're worried you could do your bit to help the government borrow by purchasing some NS&I products.

 

'Massive proportion'? - Figures, please.

 

Even so, the bonds that have been sold have been sold. - Although it's perhaps unlikely that there will be a run on Premium Bonds anytime soon, the government will be looking to borrow more money - and at the moment, they're borrowing about £165 Billion a year.

 

There is no evidence to suggest that those who already own Premium Bonds are going to be rushing out to buy more.

 

The National Debt is very high, but personal indebtedness in the UK is even higher. On average, over £58,000 per household. - That may not leave a great deal of spare money for buying premium bonds; particularly if taxes (and prices) go up on Tuesday. Many people won't be able to buy gilts or premium bonds (and help dig the country out) because they're already in personal debt up to their ears. They're too busy shovelling in their own financial holes.

 

The existing Premium Bonds may not be cashed in, but then again, the government does have other obligations which is seems to wish to ignore. If you wish to argue that as many of the bonds are not due to be repaid for some time yet they are not a pressing problem (arguably an acceptable view; there's no point in taking a short-term attitude) then surely - while you're adopting such a laudable long-term view - you can hardly ignore the other long-term obligations: PFI repayments and Pension payments.

 

The latest figures (updated 18 Jun) quote the National Debt as being 62.2% of GDP. Those figures make no allowance for PFI repayments (and the Government will have to repay them) and for pensions. - The government might wish not to pay them (could cause a problem) but they are still amounts owed. If those debts are added in, the National Debt is about 107% of GDP.

 

The Maastricht Treaty's Excessive Deficit Procedure sets deficit and debt targets of 3 per cent and 60 per cent respectively for all EU countries. The UK's deficit is running at 14% and its National Debt is approx 107%. - Not quite within the limits agreed under the treaty, are they?

 

Even the lesser figure (the figure which treats long-term bonds as an asset in the short term and ignores other long term debt (PFIs and Pensions) puts the UK's debt outside the limits which it agreed to be bound by under Maastricht.

[I1L2T3]

They shouldn't need to tell you about that ... it's hardly new.

 

The interest rate is set at the time the bond is offered for sale, but like all bonds, the effective interest rate changes in the secondary market. - If the Bank of England's interest rate falls, the trading price of the bond rises and if the Bank's rate rises, the trading price falls.

 

The government can set a price in the primary market, but if the buyers decline to buy at that price, then the government will have to think again. If buyers feel that the economy is liable to suffer from inflation and/or the value of the pound is likely to decrease, they will be less willing to buy. During the early part of this year, buyers' concern forced the government to insure the value of the bond - an additional cost of borrowing.

 

Should the country lose its triple-A rating, then the interest offered in the primary market will have to be higher to persuade potential purchasers to buy. Government Bonds are the only security a trader can describe as 'safe' and they are safe because they are backed by 'the full faith and credit' of the government.

 

 

 

'Massive proportion'? - Figures, please.

 

Even so, the bonds that have been sold have been sold. - Although it's perhaps unlikely that there will be a run on Premium Bonds anytime soon, the government will be looking to borrow more money - and at the moment, they're borrowing about £165 Billion a year.

 

There is no evidence to suggest that those who already own Premium Bonds are going to be rushing out to buy more.

 

The National Debt is very high, but personal indebtedness in the UK is even higher. On average, over £58,000 per household. - That may not leave a great deal of spare money for buying premium bonds; particularly if taxes (and prices) go up on Tuesday. Many people won't be able to buy gilts or premium bonds (and help dig the country out) because they're already in personal debt up to their ears. They're too busy shovelling in their own financial holes.

 

The existing Premium Bonds may not be cashed in, but then again, the government does have other obligations which is seems to wish to ignore. If you wish to argue that as many of the bonds are not due to be repaid for some time yet they are not a pressing problem (arguably an acceptable view; there's no point in taking a short-term attitude) then surely - while you're adopting such a laudable long-term view - you can hardly ignore the other long-term obligations: PFI repayments and Pension payments.

 

The latest figures (updated 18 Jun) quote the National Debt as being 62.2% of GDP. Those figures make no allowance for PFI repayments (and the Government will have to repay them) and for pensions. - The government might wish not to pay them (could cause a problem) but they are still amounts owed. If those debts are added in, the National Debt is about 107% of GDP.

 

The Maastricht Treaty's Excessive Deficit Procedure sets deficit and debt targets of 3 per cent and 60 per cent respectively for all EU countries. The UK's deficit is running at 14% and its National Debt is approx 107%. - Not quite within the limits agreed under the treaty, are they?

 

Even the lesser figure (the figure which treats long-term bonds as an asset in the short term and ignores other long term debt (PFIs and Pensions) puts the UK's debt outside the limits which it agreed to be bound by under Maastricht.

 

 

Bond yields are low with no credible threat to them increasing, apart from bluster. Premium bonds are held by 20m+ people. NS&I has deposits in total of approx £100bn.

 

My suggestion still stands. Why don't you do something to help the country borrow by purchasing some NS&I products?