France loses AAA Credit Rating. Britain doesn't. WE have something right.

[Tony]

If the government started building reserves for some future unknown capital spending you would probably be complaining you were being taxed too much.

 

Maybe we could hedge against currency market fluctuations by keeping those reserves in something more secure over the long term, say, err, umm, gold perhaps?

 

Oh, hang on...

[JFKvsNixon]

Spending money you don't have if it results in more coming back than what you spent makes sense.

 

I never said infinite amounts should be spent.

 

Spending money accumulated earlier would be better of course. It rarely works out to be possible though.

 

Your reasoning is sound during the normal economic cycles, for me though 2 things stops this course of action from being correct for this economic crisis.

 

Firstly, the previous government actually believed their mantra - an end to boom and bust, meaning that they stopped managing the economy in relation to the economic cycle. How could they, then it would mean that they were wrong. So they did not reduce the deficit sufficiently during the good years in the expectation of running it back up during the bad years.

 

So this put pressure on the governments ability to borrow money during the downturn straight away.

 

Now, if you couple this with the nature of this current crisis, which started of as a credit crisis within the financial industry, but has not spread to become credit crisis within sovereign nations then the ability of this government to borrow money to spend its way out of recession is seriously curtailed leaving austerity as a painful future for the UK.

[T 42]

A Ford bought in the UK was probably made in the UK and involved a UK supply chain and thousands of UK workers...

 

Not that it was relevant anyway...

 

Ford shut down car production at Dagenham in 2000 due to continual industrial problems. The Bridgeend plant closed in 2002 for similar reasons. Ford haven't made a car in the UK for 10 years.

[I1L2T3]

JFK, so the whole premise of the thread must be wrong. It started off with us being a safe haven with strong demand for gilts.

 

The premise of the thread is actually correct in terms of foreign investment - there is strong demand from foreign investors for gilts. Domestic demand for gilts is weak though.

 

The point is that we CAN borrow.

[Cyclone]

Ford shut down car production at Dagenham in 2000 due to continual industrial problems. The Bridgeend plant closed in 2002 for similar reasons. Ford haven't made a car in the UK for 10 years.

 

Ford is the biggest motor company in the UK, with seven locations and over 550 Dealerships.

 

We also have several large plants, where we manufacture vehicles, engines and transmissions, as well as parts and components.

 

In total, Ford of Britain and its dealers employ around 35,000 people in product development, manufacturing, sales and marketing, and service roles.

 

At our Dagenham plant, we produce around a million diesel engines a year, from a 1.4 up to a high performance V8 unit.

 

Thanks to its strategic position on the Thames, plus excellent motorway and rail connections, Dagenham is also our UK transport hub: thousands of vehicles, engines and components pass in and out daily.

 

Our plant in Bridgend, Wales, is the centre of our petrol engine production, for everything from a 1.25 all the way up to a 4.4 litre V8 engine.

At Dagenham and Bridgend we make and supply engines to other car brands.

 

The historic port of Southampton is home to the iconic Ford Transit.

 

And finally, our Halewood plant is run jointly with transmission specialists Getrag. It’s situated on the same site where Jaguar and Land Rover vehicles are assembled. This specialist gearbox plant supplies Ford cars and commercial vehicles.

 

From the Ford website.

[T 42]

From the Ford website.

 

Like I said. Ford hasn't built a car in the UK for 10 years.

[JFKvsNixon]

JFK, so the whole premise of the thread must be wrong. It started off with us being a safe haven with strong demand for gilts.

 

The premise of the thread is actually correct in terms of foreign investment - there is strong demand from foreign investors for gilts. Domestic demand for gilts is weak though.

 

The point is that we CAN borrow.

 

I'm not suggesting that we stop borrowing, what made you think that? The important thing is that our borrowing must be perceived by the markets as being sustainable; and I think that it's currently that perception that currently means we're considered to be as you say a safe haven.

[Cyclone]

Like I said. Ford hasn't built a car in the UK for 10 years.

 

But many of the components may have been.

Not that any of the whole 'car' aside has been relevant as it was a question asked, not a statement made.

[T 42]

But many of the components may have been.

Not that any of the whole 'car' aside has been relevant as it was a question asked, not a statement made.

 

It was a statement made by you..

 

"A Ford bought in the UK was probably made in the UK"

 

I was just correcting your statement.

[T 42]

JFK, so the whole premise of the thread must be wrong. It started off with us being a safe haven with strong demand for gilts.

 

The premise of the thread is actually correct in terms of foreign investment - there is strong demand from foreign investors for gilts. Domestic demand for gilts is weak though.

 

The point is that we CAN borrow.

 

We can always borrow. The problem is if we borrow too much the markets get jumpy. We lose our AAA credit rating and the cost of financing what we have already borrowed spirals out of control.

 

It is rather like any type of credit. When you are deemed uncredit worthy you wind up on Wonga.com borrowing at 3000% interest.