UK could lose coveted AAA rating, warns Fitch

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http://www.telegraph.co.uk/finance/economics/9144551/UK-could-lose-coveted-AAA-rating-warns-Fitch.html

 

So here we are again, ahead of the budget, Fitch has warned it could downgrade the United Kingdom's AAA rating in the next couple of years if the government fails to contain the expansion of its public debt.

 

The Treasury said the decision is a warning to those calling for deficit-funded giveways in next week's Budget.

 

Now call me a cynic but here's how i see it.

 

Once upon a time in 2008, we bailed out our financial industry as they were too big too fail. In doing so, our debt ballooned as a nation. But we were told, this was important to save the financial industry who creates massive employment and huge tax revenues for UK Plc.

 

The ratings agencies such as Fitch, were found to be sleeping on the job and allowed Triple A' products to be actually bags of dung.

 

The debt became so large, the public purse was tightened and our leaders told us we had to start taking some drastic cuts. Austerity times were beckoning. The Austerity was for us Joe Public though, the banks would continue to pay themselves huge bonuses, oh but they may have to forgo some of the employment opportunities and maybe they didnt quite pay as much tax revenue as first thought aswell.

 

Now we have Fitch, Moodys etc, telling our Governments, make more cuts or we will downgrade you.

 

In my world this is called Blackmail.

[chem1st]

I'm not sure if our money system can even remain.

 

Have you read FIAT money inflation in France?

 

http://mises.org/books/inflationinfrance.pdf

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I'm not sure if our money system can even remain.

 

Have you read FIAT money inflation in France?

 

http://mises.org/books/inflationinfrance.pdf

 

Its a very old paper. How does this play today?

[I1L2T3]

The key point is that public spending is accelerating out of control again. This is a simple warning to get spending back under control. An unenviable task for the chancellor in a stagnant economy with unemployment and welfare spend spiralling out of control.

 

The economy needs to grow. As I've said many times on here Osborne had no plans for that. It was supposed to automatically happen, driven by all the decent supply-side reforms he neglected to implement. What a mess.

[chem1st]

Its a very old paper. How does this play today?

 

The printing of money out of thin air...

 

Shortly afterward a report by Camus was made to the Assembly that the entire amount of paper money issued in less than six years by the Revolutionary Government of France had been over forty-five thousand millions of francs;that over six thousand millions had been annulled and burned and that at the final catastrophe there were in circulation close upon forty thousand millions. It will be readily seen that it was fully time to put an end to the system, for the gold "louis" of twenty-five francs in specie had, in February, 1796, as we have seen, become worth 7,200 francs, and, at the latest quotation of all, no less than 15,000 francs in paper money,—that is, one franc in gold was nominally worth 600 francs in paper. Such were the results of allowing dreamers, schemers, phrase-mongers, declaimers and strong men subservient to these to control a government.

 

Led to a massive fall in the value of paper money.

 

But wages did not rise quick enough to keep up, and unemployment increased massively!

 

Back in 1931 in the midst of the great depression (which ultimately led to the rise of the Nazi's and WWII), one town in Austria experimented with a new form of money previously proposed by the economist Silvio Gessel. A town called Worgl.

 

Back in 1931 an inscription on a house in Wörgl still recalled this sorry state: "Dah grosste aller Laster, ist, Wörgl, dein Strassenpflaster!" (Thy worst enemies, oh Wörgl, are thy ill-paved roads !)

 

The money they issued contained the following inscription upon it;

 

“To all whom it may concern ! Sluggishly circulating money has provoked an unprecedented trade depression and plunged millions into utter misery. Economically considered, the destruction of the world has started. - It is time, through determined and intelligent action, to endeavour to arrest the downward plunge of the trade machine and thereby to save mankind from fratricidal wars, chaos, and dissolution. Human beings live by exchanging their services. Sluggish circulation has largely stopped this exchange and thrown millions of willing workers out of employment. - We must therefore revive this exchange of services and by its means bring the unemployed back to the ranks of the producers. Such is the object of the labour certificate issued by the market town of Wörgl : it softens sufferings dread; it offers work and bread.”

 

In a few months, mass unemployment became full employment.

 

The roads were repaired and many asphalted, drainage systems improved, a ski jump built, along with some houses, railway street lighting improved, and other buildings were built for the public good.

 

However, the good times were not to last, the new currency was outlawed and unemployment and its ills were forced to return!

 

The Central Bank

 

The Central Bank panicked, and decided to assert its monopoly rights by banning complimentary currencies. The case was brought in front of the Austrian Supreme Court, which upheld the Central Banks monopoly over issuing currency. It then became a criminal offence to issue “emergency currency”. Worgl quickly returned to 30% unemployment. Social unrest spread rapidly across Austria. In 1938 Hitler annexed Austria and many people welcomed Hitler as their economic and political savior.

 

Germany was headed towards WWII and with the aftermath of the war much of what happened in pre war Germany just like what happened during the war was suppressed by the world. Germany was being rebuilt in the West’s image. The Worgl experiment was relegated to history.

 

TPTB don't like it when you challenge their land and monetary monopoly, especially if you do it for the good of the people!

[Uptowngirl]

Fitch has warned it could downgrade the United Kingdom's AAA rating in the next couple of years

 

Jesus you guys are struggling aren't you.

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Jesus you guys are struggling aren't you.

 

Tut tut... Its the timing not the status.