Britain's Trillion Pound Horror
 

I think this programme is essential viewing. Do bear in mind that this is one part of the discussion, but may prove eye opening.

In current affairs as this is a very current affair put nicely into focus.

http://www.channel4.com/programmes/b...es-1/episode-1

Re: Britain's Trillion Pound Horror
 

And energy bills are going up too.

Re: Britain's Trillion Pound Horror
 

Whilst I think he has some relevant points, one must be careful not to apply micro-enonomic thinking to macro-economic events.

For instance, when I took out my last mortgage for £100k in 1993, the actual amount repayable over the original term of the mortgage was about was over £200k, about 10 years of my salary at the time - if I had looked at it in those terms, it would have been too scary.

Martin Durkin is an good documentary maker, but he does have a tendency to be polemical and show "worst-case" scenarios, without any mitigating points which could lessen the impact, and often lets his emotions drive the discussion, rather than the facts (imho).

btw, I do strongly believe we should be bringing our National Debt down.

Re: Britain's Trillion Pound Horror
 

The first segment is a doomsday discussion, the second however is quite informative.

I did mention, for a very good reason, that it was one part of the discussion though ;)

EDIT: It is, in my case, preaching to the converted as you can imagine.

Re: Britain's Trillion Pound Horror
 

Don't fret, it'll all be alright, we can always print some more money..... :erm:

Re: Britain's Trillion Pound Horror
 

in affect it will never go down to 0. The problem been inflation means the value of money is constantly going down, to counter that money is created (credit), but this then causes more inflation. Think back to the 70s when the baby boomers were buying their first houses, they inflated their way out of debt as they lived through periods of high wage inflation so then their mortgages became very easy to pay off, some discussions I have had with my dad in the past ho whe likes to say how harrd it was in the 70s but he admits that paying the mortgage in the late 80s and 90s was very easy as it was small with modern wages. If the level of debt remained static but income goes up with inflation then the debt is then been inflated away.

Re: Britain's Trillion Pound Horror
 

All very true Chrysalis, the issue being far too much creation of money causing far too much inflation.

The state is 53% of the economy, an insane amount, and even with the so called cuts it'll still be big.

Stripping these cuts down they aren't reduction of spending, they aren't even reductions in real terms they are nothing more than slowing the increase in spending and hoping that the economy grows its' way out of debt.

If we cut through the bodged figures and include unfunded liabilities, PPI, etc, the numbers are truly horrifying. People complain about the effect of cuts to students yet these same students appear to have no concept that we're mortgaging the following generations to pay our bills, our pensions, our welfare right now.

I find it morally reprehensible that we have the nerve to complain about cuts to our services while being able to easily turn a blind eye to who will be paying for them. Britain got addicted to the state in the post war period and it's become so engrained that promising the state will look after people from cradle to grave is a massive vote winner simply because many of those who will pick up the tab can't vote.

We seriously need to start paying our own bills and living within our own means so that the state can stop taxing the life out of us and replacing productive activity with non-productive activity. Look at all the money thrown at poorer areas where the state is a huge part of their economies, they are no better off, indeed there's a strong argument that the state employing so many crowds out the private sector.

Every state job costs the private sector in taxation, taxes lead to lower employment within the private sector. The state has a monopolies and mergers commission yet has its' own monopolies on health and other things. The overwhelming majority of the public sector are not delivering front line services, but are those in the offices who will ensure their jobs are safe while firing those that do.

We should be ashamed, the problem is all too many of us don't care and politicians know that spending money wins votes. Asking people to pay their own bills doesn't tend to resonate too well with voters, not too well at all, and it's those same voters who couldn't care less so long as their welfare is in the post, their bins emptied weekly.

Re: Britain's Trillion Pound Horror
 

I understand what you saying but the big problem is without the state the private sector would be an even worse state (it gets overpaid contracts from the state) and we now in a global marketplace so many jobs are been shipped out of the country meaning the private sector will only shrink not grow. This country got it so wrong when they thought the financial sector could replace manufacturing. Someone needs to invent something that will catch on worldwide and make sure its manufactured here, that will create real jobs and exports.

Re: Britain's Trillion Pound Horror
 

Not really. The money for those contracts comes from somewhere. Either as debt which results in interest being paid with taxation from the private sector or directly with taxation from the private sector.

The public sector does not and cannot create wealth as each and every thing they do requires the private sector to fund it. They do nothing more than shuffle money around they do not create it. Quite the opposite the public sector has a negative effect on wealth due to the dampening effects of taxation, bureaucracy, and poorly run public monopolies.

Re: Britain's Trillion Pound Horror
 

if we were to assume what is paid in taxes would otherwise have been spent (put back in the economy) then yes you could be right. However i reckon in such a situation too many people would stick it in a bank and save it for a rainy day. Also whilst the state may be inefficient eg. over paying for contracts, they also dont have the burden of needing to make a profit and satisfying shareholders, for this reason the private sector is not always efficient at sharing wealth. The guys on dragons den are a classic example, they dont care about the uk not getting jobs if manufacturing in china makes them an extra 50p on every unit they sell. Without a state we would have more of a situation where by the richest do indeed get richer but the welath doesnt trickle down because they will do whats necessary to maximise personal gain. The state in affect is a forced spread of wealth via taxation and public services. Some companies go bust when they lose state contracts, thats how important they can be. I know a few business owners and one in particular has boasted how he can charge the council 3x what he charges another company for the same work. The extra profit has carried him through through patches numerous times.

I imagine a scenario similiar to medieval times, where rich land owners have their own set of slaves working for them the type of situation we would revert to eventually without a state. The police eg. would be replaced by a private company who would work for the highest bidder as profit is king. So if they cant make money attending a burglary then they wont do it.

Which we come back to the problem, people who pay a lot into the state (high earners) always have a feeling of poor value as the state typically provides more for the poor and vulnerable. But does this mean I dont think the books should be balanced? the answer is no, because it wrecks inflation. So in some respect I do agree with you the budget deficit needs to be fixed. But where we will very likely disagree is how much of it should be achieved by cuts and taxation.

Re: Britain's Trillion Pound Horror
 

We could actually very much do with more saving within our economy, unfortunately conditions haven't been too hot for savers.

Actually saving would have its' own positive effects, some control of money supply would reduce inflation.

There is zero evidence 'too many people' would stick it in a bank - note the VAT reduction that was done to stimulate consumption. I didn't see people saving the money they weren't paying out and the whole point was to encourage people to spend more.

Indeed that's one of the amusing things about the whole stimulus, a part of it was tax cuts in order to stimulate consumption while another part assumed people weren't going to consume if they paid less taxes so was spending like crazy.

Also of note is that during the 30s the UK adopted a monetarist approach to recovering from economic problems and recovered far more quickly than Keynesian methodology allowed the US to.

It's neither the private sector nor the state's job to share wealth.

Yes, in their attempts to maximise personal gain a part of it would be employing people to increase their own earnings capacity. Many services cannot be outsourced to another country, there is no danger at all.

It is however extremely likely that once taken over privately some of these organisations would see some rather sharp action taken with the faceless millions who do not provide front line services and who provide very little value, yet manage to cling onto their non-jobs year after year. The state merrily looks after itself and those in non-jobs are an excellent source of votes for the politicians who keep them employed in their non-jobs.

Secondary tax consumers. In my mind this guy is nothing more than a recipient of corporate welfare and I find it quite abhorrent that tax payers are 'carrying him through patches numerous times'. If he requires this welfare his business isn't viable and should go bust.

We're rather going into extremes now don't you think? Reducing the state doesn't mean destroying essential municipal and public services, privatised companies operate within regulations which ensure they offer levels of service.

One example is BT, they employ far less people, are far more productive per head and have lower fault rates than at any time when they were a public company.

Many things better when moved to the private sector and there is no endless amount of money propping them up and allowing them to be run poorly. Things in the private sector that are run poorly are usually as a result of extensive public sector subsidy propping them up with ex-public sector influences dragging them down and allowing or forcing them to be run poorly.

In what way will balancing the books wreck inflation? Unbalanced books means debt is being incurred, that debt is going somewhere, it's inflating the money supply artificially, more money means less value for each unit of it and in turn means inflation.

Inflation is, right now, way higher than interest rates which is a disaster. It needs controlling so that we can actually save for our retirements, put money aside with the hope of it being of value when we use it.

As it is right now I am consuming at a pretty rapid rate because there's so little point in me saving.

The Tories have it wrong and aren't much more Conservative than Tony Blair, Labour have completely lost the plot, forgotten how to do opposition and would promise chocolate covered gold bullion for all and bankrupt us to try and deliver it, the Liberal Democrats are a mess.

By the way for my punctuation inspector - there I didn't write it once :p:

Re: Britain's Trillion Pound Horror
 

Rok,FHM,Morrison,Kier,Gentoo to name but 5 large companies ,all of which rely very heavily on government contracts ,all of which employ large numbers of workers +use large numbers of subcontractors,all of which are in partnership with various local authorities across the country .Whilst i agree that to rely solely on government contracts is bad business practice it is essential for a lot of companies to tied them through slack times that come with doing work in the private sector. Rok have just entered administration despite winning contracts and paying nominal fees to take contracts from Connaught which collapsed earlier this year .The problem is that a lot of these maintenance companies took contracts at a loss or did them at cost simply to stay afloat when the private construction work dried up .

Re: Britain's Trillion Pound Horror
 

Which is mostly related to the change in technology since they went private. Everyone is now on highly reliable digital exchanges (System X, AXE 10) - and the main switching hubs across the UK are all digitally interconnected now. The old Mechanical strowger exchanges needed far more manpower, and were much more prone to faults. The first electronic exchanges (TXE2, TXE4) were more reliable, but still prone to problems, and still required more manpower than digital. Even a lot of the old copper cable is now slowly being phased out in favour of optical, again, more reliable.

(Some of Nottinghams digital exchanges are now over 21 years old, I know, I help convert a fair few of them).

Re: Britain's Trillion Pound Horror
 

Ignitionnet,

>>Also of note is that during the 30s the UK adopted a monetarist approach to recovering from economic problems and recovered far more quickly than Keynesian methodology allowed the US to.<<

In the 30's the USA reduced liquidity and slipped into a depression until they switched the liquidity back on. It took an electoral cycle before the incoming president took the economy on a 180 degree shift back to recovery.

Bernanke studied the cause and consequence of the depression and it is his declared intent to fight deflation which leads to depression.

The coalition have opted for an internal liquidity reduction in the hopes of Global growth stimulating private sector growth. To what extent the gamble pays off only time will tell but they are following a principle that failed abysmally for the USA.

>>One example is BT, they employ far less people, are far more productive per head and have lower fault rates than at any time when they were a public company.<<

You could not have picked a poorer example to illustrate a point.

Technology changes that did not exist in a usable format pre 1990's and were subsequently adopted caused the improvements.

Several different methods of exchanges were run prior to the big change and all were labour intensive and required large numbers of skilled workers to operate and maintain different technologies with a myriad of variations on a theme.

The advent of computer controlled packet switching coupled with inter exchange use of fibre technology turned the old mainly mechanical methodology into the fore-runner of what has now morphed into the internet with VOIP. The fault reductions were brought about, in the main, by methods that had none of the inherent noise of mechanical system.

Well over 100K staff were shed because they were simply not needed as technology replaced them and their skills.

You are comparing a company that is now computerised in every way with an era when the best PC available was a 286 running Dos.

Re: Britain's Trillion Pound Horror
 

BT are a great example. Most of the deployment of System X, etc, used private money and in turn the deployment of 21CN and the cross over to all IP network has used private money.

Private companies invest in technology to drive efficiency. The public sector pontificate for a few years, eventually put out tenders, get ripped off wholesale by suppliers or have suppliers bid themselves into bankruptcy and finally deliver projects which fail to reach the original criteria, are late and are over budget at which point they just dip into the tax payer's pocket some more and the people whose project failed to deliver are congratulated and sent off to their next failure or take the job they were promised in return for favouring a supplier.

The private sector doesn't have politicians' whims to win elections to satisfy and doesn't have to deal with a self-serving civil service bureaucracy trying to justify their existence meddling in things. BT's efficiency cost jobs, jobs which may have caused a government a lot of issues had they been perceived as shedding them. Not to mention the horrific state of government procurement.

---------- Post added at 15:00 ---------- Previous post was at 14:48 ----------

We've quite a different economic challenge to the US. Inflation there is quite tame, here not so much.

The USA is throwing phenomenal amounts of money at their economy not just in QE but stimulus and the results are debatable.

The UK did a couple of good things to stimulate our economy, the VAT cut and scrappage allowance were good things, sadly those appear to be over now and the taxes are wading in.

As you have said it's a liquidity reduction as it's not only the reduction of government spending, which is absolutely appropriate, but there are additional tax rises as well. We are a services based economy, services don't export too well, and it's bizarre that services that we can actually 'export' well, financial services, we're hamstringing ourselves and allowing the EU to finish the job.

The alternative is, of course, not an option as it's politically unpalatable. We'll finish this parliament with a massive state still and it'll just get grown again during the economy's healthier times to bribe the electorate. Meanwhile the public sector pension liabilities go up, PSBR remains unpleasant, and us, the welfare from cradle to the grave generations lap it up with no care of the amount of debt we're saddling the next generation with.

---------- Post added at 15:03 ---------- Previous post was at 15:00 ----------

How about the access network Paul? Exactly the same stuff is still in the ground and hasn't been phased out in favour of optics. There are no TPON deployments being done, the fibre is being laid next to, not as a substitution of, the copper network.