The world's most-read Scottish politics website

Wings Over Scotland


The oncoming storm

Posted on November 27, 2013 by

ps1

ps2

 

ps3

ps6

ps7

 cpov

  ps4

 ps5

Sooner or later interest rates will go up. What then?

Print Friendly, PDF & Email

97 to “The oncoming storm”

  1. Horacesaysyes
    Ignored
    says:

    Indeed – Vote No and everything will be just tick along as normal.
    Aye, right!

  2. Annibale
    Ignored
    says:

    The question is – where is the money going?
    It’s not going on welfare or public services, as they’re being slashed year on year, it’s not going on defence for the same reason.
    Is it just paying interest on the debt?

  3. David Smith
    Ignored
    says:

    One day next year, we will have a one-off opportunity to eject from this diving aircraft flown by lunatics.
    I strongly recommend we pull that handle. 

  4. Alistair Davidson
    Ignored
    says:

    Representing spending or debt in absolute terms is meaningless. Only as a % of GDP is it a useful figure. If you look that up you’ll find UK government debt is high but not as high as it has been in the past, eg after WW2. State spending has not exploded. The Tory right are peddling this as a lie to make us accept austerity. The graph comparing UK debt to other countries infludes private sector debt. Now that is a good argument against the UK. Falling wages have led to huge credit card debts.

  5. Helena Brown
    Ignored
    says:

    I am still waiting on someone from the Better Together Campaign telling me how I will be.
    Seems we should jump before we are pushed. I can see the end of pensions for those with any money what so ever if we stay in the Union.
    Will be okay for Alistair and Co, they sorted theirs.

  6. mogabee
    Ignored
    says:

    Whichever way you look at the stats they tell a depressing story. 

  7. Appleby
    Ignored
    says:

    The debts for the UK are even worse if you look into unfunded liabilities and other “off-book” stuff that normally isn’t included in offical measures of debt.
     
    Falling interest rates, falling wages (in real terms adjusted for inflation, etc.) and massively increasing price of housing in a ridiculously short time (the change of housing from a place to live to becoming some sort of a “wage replacement” was a disasterous move). It’s like being in one of those Indiana Jones style trap rooms withe walls or ceiling slowly closing in on you. Except rather than look for the way out or to defuse the trap, all our leaders are telling us to simply crouch lower and take up less room as a solution.
     
    The more you look into the situation and set up, the more obvious it is that it is badly broken and won’t last forever, even if there are short term mesures to try and stave off an exponential disaster.

  8. desimond
    Ignored
    says:

    I assume a PFI graph would look strangely similar…or a “Consultancy” graph for the big Accountancy firms draining the Government coffers…

  9. Jock Politicaljunkie
    Ignored
    says:

    When the rUK falls off the cliff, Greece will seem like a bit of a poor reaction to an overdraft letter! We must vote YES to avoid being dragged under when this happens. A sad state of affairs.

  10. Morag
    Ignored
    says:

    What will happen when interest rates go up?  It’s not a pleasant thought in the context of the argument above, and yet in a different sense we need interest rates to go up.  Private pension provision is mainly predicated on getting a reasonable return on a pension pot which has been built up over many years.  Everyone is being encouraged to save for retirement, though exactly how that’s supposed to be possible while working on a zero-hours contract under the burden of £20,000 worth of student debt I’m not sure.
     
    Nobody can live comfortably on the state pension.  Index-linked final salary pensions are getting rarer and rarer.  Most people are going to have to rely on savings built up during their working lives.  With a return of say 5% or 6%, the sums can work out reasonably well.  However, if the return is derisory so that one has to live on the capital, it becomes impossible.  Very few people can afford to save enough capital to support them until the age of 95 or whatever.
     
    If interest rates stay as low as this in the long term, the country is building up a huge problem for the future when people retire.  Pension funds that didn’t grow much, being expected to yield peanuts.  And that’s for the people who actually managed to save something, in a time when saving seems increasingly impossible.
     
    It’s not a pretty outlook whichever way you slice it.

  11. tartanfever
    Ignored
    says:

    A frightening set of graphs there Rev.
     
    Personally it reinforces my belief that the referendum vote is so much more than an economic debate as the unionists claim, it’s about a fundamental shift in how we run our society and the power of the electorate to influence and change things.
     
    With FPTP used in Westminster elections and an extreme narrowing of the political and economic landscape which has made the three main parties essentially the same you have to question just how democratic the UK is ?

  12. Robert Kerr
    Ignored
    says:

    Will the storm break before the referendum?

  13. Ruairidh
    Ignored
    says:

    Figures like these are vital in pressing our case. I think it would be even more effective if these could be expressed if possible with details of Scotlands public and private  debt. One of the most effective answers AS gave yesterday was when talking about the free child care proposal. What this displayed was how we identify a long term problem that being in the Union cannot solve (like debt both public and private) but how independence allows us to tackle this in an innovative way that will not be possible in the Union. illustrations like this and those similar in the White Paper is what will win this for us.

  14. PRJ
    Ignored
    says:

    Public debt has grown on the back of privatisation. The more state assets are sold the greater the spending has become. Examples of privatisation effect on public spending is seen in PFR’s and the NHS(England) which now encompasses the private sector and who funds that? How about the failed projects in England, “the data base” millions to the private sector as just another example.

  15. sneddon
    Ignored
    says:

    All it will take is for interest to rise to combat higher house prices (in spite of govt 12 bn subsidy to buyers) and that will be the tipping point.

  16. Les Wilson
    Ignored
    says:

    I watch and read a lot of this stuff, the UK debt is unsolvable and will lead all of us into a terrible situation, and I mean all of us. Indeed as Scotland is a normal whipping boy for Westminster we will get every lower standards of living here. Even worse than England as they suck us every drier. 

    The point may be that we actually do need our own currency which would offer us protection not available to rUK. Also, the SG is absolutely right, Westminster will clamour for a currency Union but even if it happens, their debt situation will just get worse, as Rev points out here, austerity will not solve it.

    SG is again right that growth is the only way out, that means us, who reside in a free Scotland have a chance if we say YES, we have NO chance if we stay in the Union they will take as much as they can get from us, but it will not be enough even then. If Scotland votes yes, then we have a chance to make things less bad, but we will still be effected by the UK debt problem, our share will rise with theirs, in truth it is all theirs.

    I thank the Rev for bringing this up, it both has to be pointed out, and discussed.It is the big message we need to give to everyone that will listen, they have to listen, otherwise we are truly sunk, and not in the too distant future. 

    rUK has one thing that may help them and that is fracking on a large scale if the deposits they think they have prove to be real, that is why Osborne is so keen for fracking to start. It may help them or it may be too late, time will tell.

  17. desimond
    Ignored
    says:

    This reminds me of the Darling and Carmichael claim that Scottish People are aging quicker than the rest of the UK….if only aging was an Olympic sport eh? Maybe this is why the Unionist want to keep everything the same…keeping the life expectancy in places like Shettleston to below 60 years of age should help reduce pension demand issues!

    The amazing thing is that people believe Austerity is something on which we have no choice, they dont see it as a policy. Fine piece of snake-oil selling there!

  18. scottish_skier
    Ignored
    says:

    Public debt has grown on the back of privatisation.
     
    Yup. That and lower taxes for the wealthy. Privatised public services cost more; the extra cost being profit. Tax cuts can win votes, but decent public services win votes too. How can you have unless you borrow, borrow, borrow…

  19. desimond
    Ignored
    says:

    Apparently according to link below, its all them from over there coming over here thats caused it!

    BBC link

  20. Les Wilson
    Ignored
    says:

    Morag
    You are absolutely right !

  21. X_Sticks
    Ignored
    says:

    Robert Kerr says:
    “Will the storm break before the referendum?”
     
    I don’t thinks so Robert. Certainly as far as Sotland is concerned. I think the only thing that has stopped extremely harsh cuts being imposed on Scotland is the referendum. I’m sur Osborne would love to hack the Scottish budget, but his (their) fear is if the do it now it will mean certain independence. They are holding off until after the referendum in the hope we will vote no.
     
    If we do vote no in the referendum Scotland will be savaged by westminster. What Thatcher did to Scotland will look benign in comparison.

  22. faolie
    Ignored
    says:

    Was at a Business for Scotland breakfast today. Two debt figures that I didn’t need to write down (cos they were a bit shocking) were the UK debt when the Tories took over (£750bn) and projected debt for 2015 (£1.5tn). Gulp! What indeed will happen when interest rates rise? (Current UK debt as % of GDP is around 89% btw – not too clear from your graph Rev.)
     
    O/T, John Swinney gave a short presentation at the meeting. Very cool, very measured, just as he is on telly. Rubbished the IFS predictions as only credible if indeed we emulated UK economic programmes, which we won’t, going instead for growth.

  23. creigs1707repeal
    Ignored
    says:

    @Rev
    Sooner or later interest rates will go up. What then?
     
    The UK will not be able to service the interest on its mountain of debt and will implode. As world renowned economics professor Steve Keen, recently stated:
     
    “The UK economy is a ponzi scheme. Scotland should get out whilst it still can.”
     
    ‘Austerity Britain’? A minor bump compared with the iceberg looming on the horizon that will sink HMS Britannia good and proper. We gotta get outta this place–before it’s too late.

  24. Dcanmore
    Ignored
    says:

    @annibale…
     
    Annibale says:
    The question is – where is the money going?
    Answer: London! I see it every day £billions being spent on projects across the city with more being touted on almost a daily basis. In yesterday’s Evening Standard there’s a £50billion plan turn part of west London, near the BBC, into a new business and transport hub. Boris wants a new island airport in the Thames estuary (cost £40billion) to replace Heathrow, the transformation of Battersea power station site into effectively a new town (cost £8billion), the rebuilding of the Crystal Palace with park and gardens (cost £500m); demolition and rebuilding of Elephant and Castle estates (cost £1.5billion). London is sucking the life out of the UK and it gets more and more expensive to live in the place. I have friends who earn around £30,000 and have to leave to live cheaper elsewhere. A colleagues travels on a 40min train journey from Kent and she spends £4000 every year traveling into London to work. Crazy I tells ya!  
     

  25. Luigi
    Ignored
    says:

    Annibale:     

    The question is – where is the money going? It’s not going on welfare or public services, as they’re being slashed year on year, it’s not going on defence for the same reason.
    Is it just paying interest on the debt?
     
    Super carriers, WMDs, illegal wars, HST, MP’s expenses, House of Lords, the Queen, tax breaks for the rich, maintaining a low wage, high anxiety economy; and a multitude of other unworthy causes.

  26. Ken500
    Ignored
    says:

    Scottish Gov website Search GERS P30/36

    Cutting taxes and no growth has increased UK debt £38Billion.

    Total taxes raised in the UK were £610Billion. Now £572Billion – £38Billion

    Royal Mail was sold off and the Pension Fund taken – £40Billion – £38Billion Pension Fund (including £10 liability).

    UK gov spending £693Billion. £572Billion raised difference £121Billion. Selling off assets £40Billion? to pay down the deficit.

  27. dcomerf
    Ignored
    says:

    I think it weakens the case to show the debt and state spending graphs in £Billions. These are graphs over time and the economy has changed over time. You need to show as a %of GDP. You’ll then see that debt peaked over WW2 and then fell (it’s now rising but it has not yet risen to same level). However the UK is now at peacetime records in terms of debt and spending per unit GDP.

    The message is then less extreme, but still powerful and less easily criticised.

  28. Atypical_Scot
    Ignored
    says:

    @Alistair Davidson;
     
     If you look that up you’ll find UK government debt is high but not as high as it has been in the past, eg after WW2
     
    We’re not at war though.

  29. Morag
    Ignored
    says:

    It’s like being in one of those Indiana Jones style trap rooms withe walls or ceiling slowly closing in on you. Except rather than look for the way out or to defuse the trap, all our leaders are telling us to simply crouch lower and take up less room as a solution.
     
    I am SO stealing that.
     
    The UK economy is a ponzi scheme. Scotland should get out whilst it still can.
     
    And that.

  30. Luigi
    Ignored
    says:

    Sooner or later interest rates will go up. What then?
     
    Austerity Max (you ain’t seen nothing yet).

  31. DougieDouglas
    Ignored
    says:

    The most worrying table is the child poverty league (i’m sure the Scottish figure would be higher than the UK one too).

    It shows not only economic mis-management but social too, it’s actually the manifestation of both. We see that Scotland lags behind most countries in Northern Europe and we can see clearly the result of liberal democracy, economics and social policy in Scandinavia.
    It clearly shows us how to use our wealth and how to shape our policies.

    A poor figure for Ireland but they can of course point towards a higher GDP than us.

  32. Ghengis D'Midgies
    Ignored
    says:

    I agree with Alistair Davidson above –
     
    “Representing spending or debt in absolute terms is meaningless. Only as a % of GDP is it a useful figure. If you look that up you’ll find UK government debt is high but not as high as it has been in the past, eg after WW2. State spending has not exploded. The Tory right are peddling this as a lie to make us accept austerity. …..”
     
    Not only do they ignore the increase in GDP but they ignore inflation. One pound now is worth only pennies compared to a pound in 1920.

  33. Robert Kerr
    Ignored
    says:

    X_Sticks.
     
    I meant the storm breaking over the UK and Sterling.
     
    Westminster is obviously “kicking the can down the road” until after the 2015 GE.
     
    Can they manage it? Or shall we watch Max Keiser “eat his shorts” on Russian TV.

  34. Ken500
    Ignored
    says:

    Scotland should get out. London S/E will just not pay enough tax. Low taxes win votes in London S/E for right-wing Parties. The rich get richer and the poor get poorer. Inequality increases,

    The poor, elderly and vulnerable are being neglected. It doesn’t have to be like that.

  35. Papadocx
    Ignored
    says:

    Anas sarwar arse licking Cameron “Dave sure they Jocks are a joke” “sure are sanwar my friend” lick lick lick. SLAB completely sold the knickers. Cameron doing well keeping out of the independence question. 
    I get more determined every time I hear these slugs.

  36. MajorBloodnok
    Ignored
    says:

    Robert Kerr says: Will the storm break before the referendum?
     
    It may do if the markets take seriously Westminster’s threat of no currency union.   A currency union will surely only delay the crash when it comes … the rUK’s ruling class will be fine though, whatever happens.

  37. Murray McCallum
    Ignored
    says:

    I wonder if a significant devaluation of £Sterling is the only escape? In theory, a possible way to achieve this is to exclude Scotland from a formal £Sterling Zone.
     
    Whatever way you dress up UK debt it is bad and will get worse. The SG white paper sets out some plans to tackle this problem in the Scottish context. These plans, e.g. immigration are at odds with Westminster.

  38. Iain
    Ignored
    says:

    It’s true: the UK as was – one of the world’s top states – is going down the tubes. In its present form, it would be able to limp along on credit, utilising the goodwill derived from historical influence and bluffing its way in international relations by always seeking the top table, making sonorous pronouncements and issuing advice. But for that it needs to be seen to be one of the top states, and that would be seriously damaged if the UK Government didn’t even control the island of Great Britain. Which is why independence for Scotland is opposed so strongly: RUK would be just another small European state, but with worse than average debts and social discord, and lacking the economic and social resources for long-term recovery.

  39. Greannach
    Ignored
    says:

    The link to the BBC given above by desimond gave me a further scare where Yvette Cooper is boasting that Cameron’s latest publicity grab on benefits for immigrants is only following Labour’s original idea. The really tragic thing about the statement is that it’s probably true. So, while Lamont is sticking the boot into spongers in Scotland, Labour Lady Cooper is kneeing the gippos in the balls. How did the Labour Party go so far off track?

  40. cynicalHighlander
    Ignored
    says:

    @Greannach says:
     
    ‘How did the Labour Party go so far off track?’
     
    Personal greed.

  41. Bubbles
    Ignored
    says:

    I read somewhere that the UK borrows £300 million every day and of that £160 million goes to servicing the interest alone!

  42. creigs1707repeal
    Ignored
    says:

    @Morag
    I slightly misquoted professor Steve Keen.  What he actually said was:
     
    “The UK economy is a ponzi scheme that is about to go bust. Scotland should get out while it still can.” (From Business for Scotland website – How Scotland’s economy went south).

    Professor Keen is one of the few world economists who correctly predicted to 2008 global financial meltdown.

  43. James Morton
    Ignored
    says:

    Greannach, the reason is that Labour feels it needs to attract the right wing floating vote in England, if it wants to win the next GE. Subsequently it has been veering further to the right. The tories do the same, the UKIP takes it one step further and so Labour has to go that one step further to outflank them. And so it goes, as Mr Vonnegut once said. Remember the dithering over Bedroom tax? It was only when they felt it was safe did they come out against it. At the moment its the only thing that separates them from the Tories. Yet they intend to “pay” for it by hitting tax avoiders with a windfall tax. This makes me suspect they don’t really intend to repeal it, but only mitigate it by introducing a whole new tier of benefits…means tested of course. This chimes in nicely with what Lamont would like to see happen.

    Its at this point you see how dysfunctional the UK system has become. A true union of nations in the “UK” just isn’t possible at this stage. You can argue that its been in a state of decline since the 60’s. Its just that neo-liberalism speeding that collapse up while arguing for the appearance of Union.

  44. Bugger (the Panda)
    Ignored
    says:

    The UK has had poor economic performance, productivity, and innovation since before WWI.

    The Uk’s response has always been to inflate the debt away by way of devaluation, that is to say allowing the £ to depreciate in the money markets.

    They will not change that and we will be in for a economic typhoon of biblical proportions as everything imported which for England includes Food and Electricity.

    Oil is designated and paid for in $, so far, and without that the US would be stuffed although they are now self sufficient in gas and petrol, through fracking. The  motivation for invading Libya was that Gadhaffi was setting up an independent petroleum settlement system outside the $.

    Russia and China are quietly doing the same at the moment. This could mean that the internal currency of debt settlement would not not include dollar purchases.

    I think there is more than enough shit building up all over the place for a cluster f’_k of a unbelieveable storm brewing.

    All the major currencies are stuffed and the only way out is a massive world debt forgiveness and a new start with one World independent settlement currency, just like Keynes wanted.

  45. Luigi
    Ignored
    says:

    I read somewhere that the UK borrows £300 million every day and of that £160 million goes to servicing the interest alone!
     
    Sounds like the biggest pay day loan in history.

  46. Jamie Arriere
    Ignored
    says:

    Is the debt increasing because spending has increased or because tax receipts have collapsed? With most of the banks, which declared billions in paper profits before the crash, now posting megamillion losses, and the fact that most folk haven’t had a pay rise in years – surely that’s caused debt to soar as much as spending. Don’t think the spending has ballooned to any great extent – it’s just we’ve run off the edge of the cliff and our legs are still running.
     
    I bet Westminster only starts admitting we’re falling on September 19 2014. Vote Yes!

  47. Bugger (the Panda)
    Ignored
    says:

    The UK is a Wonga economy.

    Without Scotland’s oil it is lights out for the rUK.

  48. Morag
    Ignored
    says:

    I never cease to be amazed at the inability of people to spot what’s wrong with a Ponzi scheme.

    There was one on the Isle of Wight some years back, which was supposed to raise money for women for various purposes.  It was called “Women Empowering Women”.  Of course the early joiners did well, as always happens.  Then it began to go pear-shaped.  At this point the organisers were interviewed on TV about it.

    The interviewer explained clearly what the problem was, that in a fairly small number of geometric progressions everyone in the Isle of Wight would be involved and there would be no new recruits.  And that extending the scheme to mainland Hampshire would only delay the inevitable.  All that happened was an impassioned attack on the interviewer, asking why she was so against a scheme set up to help women.

    http://www.theguardian.com/uk/2001/aug/05/tracymcveigh.theobserver

    I think our financial masters understand this no better.  I want John Swinney in charge and the sooner the better.

  49. HandandShrimp
    Ignored
    says:

    Hi Stu
     
    The fifth graph down on this would be a nice wee addition to your selection.
     
    http://www.economicshelp.org/blog/334/uk-economy/uk-national-debt/
     
    It is probably fair to say that these are testing times for the UK economy and despite all the usual guff about sponging Jocks the UK can’t really afford us leaving the party at the moment

  50. rabb
    Ignored
    says:

    The storm will break in the next 2 – 5 years.
     
    Why? Because the BoE won’t be able to hold back inflation rates whilst maintaining low interest rates. The two (to the best of my knowledge) cannot be kept in check indefinitely. If inflation rises interest rates need to rise to control it.
     
    Austerity is being used as a weapon to curb inflation & keep interest rates down so the borrowing can continue. Westminster is selling our very soles to the devil in order to put up a false façade of wealth & power to the world. It’s bullshit and has to end.
     
    I think someone used the analogy “kicking the can down the road”. That’s EXACTLY what is happening. In the very near future that can will hit a wall and the UK is royally up shit creek with no paddle.
     
    We have an option next year to get out. I suggest we all take it while we can!

  51. Liz Quinn
    Ignored
    says:

    Papadocx says:
     
    Anas sarwar arse licking Cameron “Dave sure they Jocks are a joke” “sure are sanwar my friend” lick lick lick. SLAB completely sold the knickers.
     
    I accidentally heard that on PMQs today. Really felt like throwing up. Sarwar inviting Cameron to join him in insulting the WP. He is a disgusting creature.

  52. Bugger (the Panda)
    Ignored
    says:

    The City of London and the unregulated spivs in £1,000 suits are still at it. Selling bits of paper to each other in a circle and declaring a profit at each turn. It is nuts. The money does not exist. We are heading for a second series of bank collapses, sooner or later.
    Work this one out.

    A man goes into a town and wants to have a room for the night at the town’s only hotel.

    He asks to see it and the Hotel owner says fine but he’ll need to leave a deposit of £100 with the desk when it inspects it.

    The moment he goes upstairs  the Hotel owner runs outside, pays the Grocer off with his £100 and he in turn pays off the local prostitute off with it. The prostitute runs back to the hotel and pays the Hotel owner for her bedroom debts.

    The traveller comes down, says he doesn’t like the room, gets his £100 back.

    So, the village has eliminated its debt from borrowed money?

    Anybody want to opine if that is theoreticially or practically possible?

  53. Macart
    Ignored
    says:

    Not so much storm as biblical flood scenario.
     
    A no vote will bring untold pain to those already suffering. For those who have been lucky enough not to feel the pinch so far? Be prepared to move your weekly shop from M&S to Farmfoods. Fois gras to meat paste and steak to frozen sausage.
     
    Like most of us.

  54. Murray McCallum
    Ignored
    says:

    It will be interesting to see if Japan finally escapes its economic malaise (with ageing population and animosity to immigrants). The significant devaluation of the Yen is central to their plan. Their key ally; the USA, may continue to accept a low value Yen to maintain the health of their key Asian ally.
     
    Will the UK use a similar path and seek to further devalue Sterling?

  55. The Man in the Jar
    Ignored
    says:

    Bugger (the panda) beat me to it.
     
    Vote No for a Wonga economy! 

  56. Rev. Stuart Campbell
    Ignored
    says:

    “The fifth graph down on this would be a nice wee addition to your selection.”

    Have pinched and edited in two of those, ta.

  57. Mosstrooper
    Ignored
    says:

    @Rabb 1.21
    “Westminster are selling our soles” ?  Something is afoot I fear.

  58. Ken500
    Ignored
    says:

    UK spending £121Billion extra – £10Billion a month. It will come down from selling off assets. £40Billion to £81Billion Although Royal Mail Pension liabilities will increase Gov liability £38Billion – pushing debt down the road.

    Tax revenues have fallen £38Billion. Gov Spending has fallen £27Billion.

    If there had been no tax cuts – more could have been cut off the deficit – or less could have been cut from public spending/welfare.

  59. Simon
    Ignored
    says:

    “Anybody want to opine if that is theoreticially or practically possible?”

    Well the thing about borrowed money is that you have to pay interest on it.

    I think a main reason that the UK economy is a ponzi scheme is because there has been a long term reduction in actually producing things that people want, and a change over to “services” especially financial services, ehich don’t produce anything useful but which charge us all for the privilege.

    It heartens me that the Scottish government and the SNP have consistently made efforts to support manufacturing in Scotland. I don’t see any other way to continue to be honest.

  60. Calgacus MacAndrews
    Ignored
    says:

    Things are getting very bad when it looks like we haven’t even got the money to start another little war somewhere.

  61. kendomacaroonbar
    Ignored
    says:

    Can anybody enlighten me why the Labour government in the 70’s had to go cap in hand to the IMF for 4.5 billion dollars, instead of the copper bottomed UK lender of last resort the BoE ?  or lender of last resort but 1?

  62. Papadocx
    Ignored
    says:

    kendomacaroonbar 2:22 pm
    Harold Wilson was throwing to many wild parties in no.10 for the TUC, STUC etc. the cat (can’t remember it’s name) got fed fish suppers, which were very expensive due to a COD war with Iceland going on at the time (WE LOST). 

    Harold told the World he was going to put the country back on its feet. Job done! There was a national transport strike and we all spent two weeks walking to work.

    Harolds next plan was the white heat of technology. A those were the days.

  63. G H Graham
    Ignored
    says:

    Sovereign debt interest rates will only rise when the current yield is no longer sufficient to mitigate the risk of default. Eventually, investors will resist buying more debt because the return is too low. Thus, the Bank of England will have no alternative but to raise interest rates in order to attract more buyers of sovereign debt as long as the British Government needs to borrow more money.
     
    Britain can put an end to the escalating debt mountain but only by slashing huge departments & their budgets, thus putting hundreds of thousands out of work. In turn, income tax receipts fall dramatically thus forcing deeper cuts. 
     
    This is where Greece is at; society wide cuts with no hope of generating enough taxes to pay the insurmountable debt or the interest on the debt. Short of a miracle rebound, the only foreseeable exit strategy then is to either devalue the currency to near worthlessness as happened to pre WW2 Germany or replace the existing currency with a new one. 
     
    Unless the British can find a miracle cure for a deadbeat economy, it is highly likely that Britain will follow the Greek path when the interest rates will surely rise to unsustainable levels.
     
    I predict then an economic disaster is just around the corner. Scotland can avoid this of course by getting out but it must also then have an alternative currency plan once Sterling is in danger of becoming Monopoly money.
     
    When will this happen? Don’t know but the debt projection charts give a strong indicator that financial meltdown of the British economy is but a few years away.

  64. Thomas William Dunlop
    Ignored
    says:

    When I see that dat , it confirms my suspicion that sooner or later the UK is heading for its big crunch and Westminster is playing a good game of hiding it. (To his credit Iain McWhirter has been going on about it for years, and I for one have been listening)

    The whole reason to keep the pound was to tag the Scottish economy to a weaker currency so that exports remain competitive (just like Germany enjoys being tagged to the euro-the Mark would have had a much higher value and have the effect of pricing out Germany manufactured goods). Now that I see this data, it makes me nervous, I’d rather join the or peg to the euro than the pound (or even have the Scottish pund). ie. at what point doe sthe pound become so junk that it starts to harm Scottish interests- when the international markets refuse to lend to the BoE???? However at this point, the SNP GBP proposal is just that. It will be up to the negiotiators & future SGs to make the choice based on pledges put to the electorate in the next Scottish GE

  65. Thomas William Dunlop
    Ignored
    says:

    So it down to the line they can stuff their pound and the national debt too, if they can force us not to have the former. It might take longer to negiotiate our way to the EU , etc but we would start off debt free and fantastic set of natural resources- oil, renewables and our people!

  66. Edward
    Ignored
    says:

    Just been having a look at the balance of payments charts
    http://www.economicshelp.org/blog/5776/trade/uk-balance-of-payments/

    This above all else, is the reason that Westminster would be suicidal to prevent Scotland being part of a Sterling zone
    Currently all Oil exported to outside the UK is attributed to the UK’s balance of trade figures, which at the moment are in a bad way
    The figure I have seen is two thirds of the oil is exported outside the UK and a third is sold to the UK

    Now think on this. After independence that ‘two thirds of the oil’ that exported to the world will become a nice plus amount on the Scottish balance of trade figures. Where as on the rUK balance of trade figures it will disappear and making them more negative.

    Any oil, post independence, that sold to the rUK from Scotland, will also add a positive figure to Scotland’s trade figures and just add more negativity to the rUK’s
     
    The same will go for Whisky, currently global exports add to the UK’s balance of trade figures. But after independence, it will disappear from the rUK balance of trade, pushing it further down. Where as the global export sales will add a large positive figure to Scotland’s balance of trade.

  67. Eco_Exile
    Ignored
    says:

    @G H Graham
    ….to either devalue the currency …or replace the existing currency with a new one. 
    They’re not bluffing on the currency,  you know.

  68. Papadocx
    Ignored
    says:

    If yanks are in the same shit we are in then All’s well for a wee while we will go back to plan “B” . That is printing wee bits of paper and calling them £. Technically it’s called “quantative easing” if you are a government. Or forgery if your a normal punter. End result of either your currency is F***** and the banking system collapses! and China gets real pissed off. 

  69. Les Wilson
    Ignored
    says:

    All the UK “Ponzie ” scheme comes from mismanagement and poor or non existent regulation of the whole financial system.

    You can look back in time and see where that started as far as UK is concerned. However, the real start which I think is where the UK got it’s ideas from, came in America which is now the biggest Ponzie scheme of all time and they have exported this across the world, taken up in the Western world in particular. 

    Even the Asian countries are following the lead. It need not have happened if countries HAD stricter money management and tougher financial regulations and if they had more backbone.

  70. velofello
    Ignored
    says:

    Morag: So what is a poor girl, or boy to do? Quantitive easing and inflation exceeding interest rates are eroding cash holdings. There is little prospect of the young building an investment portfoilo. For older homeowners downsize their housing upon retirement? Many have tried it and after the costs of buying and selling, redecoration etc.the outcome has been they are sitting in a smaller house of less capital value, with little cash banked, and with an annual saving on Council Tax.

  71. rabb
    Ignored
    says:

    May I also add that the recent introduction of workplace pensions wasn’t because the UK governemnt were concerned about those poor folks without a pension.
     
    It’s more akin to the UK government having you piss what little money you have into a pension pot that they can seize when the shit inevitably hits the fan!

  72. G H Graham
    Ignored
    says:

    Quantitative Easing in the USA is simply the Federal Reserve printing vast amounts of money, it then uses to buy securities, specifically sovereign debt from the USA Government.
     
    This has propped up the yields on the debt (& equity values rise in line too which is great for rich people) but as soon as the Feds reduce the amount they print, the yields will fall, thus forcing interest rates to rise. The B of E is doing the same.
     
    But neither is sustainable because the debt still has to be paid back. The main reason it works currently is due to low interest rates. As soon as they rise, the deck of cards starts to wobble.

  73. Papadocx
    Ignored
    says:

    Most if not all unionist Scottish politicians should be charged with being ("Tractor" - Ed)s to their fellow scots and the Scottish nation. If we could do that do you think we would have enough evidence for conviction.
     
    BBC should have its licence removed for habitually not living up to its charter and anti Scottish bias.

  74. Krackerman
    Ignored
    says:

    This is an interesting graph as well… It shows the increase in UK debt held by…. well the Bank Of England…. it’s two years old so as there has been no economic recovery and even more public spending the share is likely to be even higher…
    So the BOE prints money of the air – and via the banks and directly through it’s own asset purchase program, buys UK debt.. The UK government then uses this new money to fund the state, effectively putting that money into circulation. Hello Sterling devaluation and hello price inflation… 30% since 2008.
    This graph alone – the snake eating it’s own tail – is all you need to understand why the austerity from 2014 onwards WILL BE REAL – year on year until 2018 at least. The UK and it’s public services as we know it won’t be recognisable by 2020… 

  75. Theunicorn
    Ignored
    says:

    The graphs shown here are the same or similar to those portrayed in “Money Week’s” publication The End of Britain. If you were in a gigantic hole why would you want to keep digging.? When the Uk Gov says it is reducing borrowing what it is really saying is the amount of money it needs to borrow each month is lower that the previous year/month. EG if you needed to borrow £100m every month for 1year and due to rising revenues you only needed to borrow £75m in the 13 month and the next 11 months, then that’s represents a 25% reduction dressed up as huge improvement in piblic sector borrowing. The reality is by the time you get to the end of the first 12 months you owe over £1.200,000 ( plus any previously accumulated debt and interest ) and your borrowing is increasing at a rate of £75m a month. What we dont know is how much of this money is borrowed to be spent on capital projects.
    If you and I were in a situation like this what would we do 
    1. Cut back day to spending
    2. Sell some of our assets
    3. Extend the length of the borrowing period in an attempt to reduce monthly outgoings
    4. Seek new loans at a lower interest rates and a repayment loan period.
    5. Find some way of generating new sources of income.
    6.Go bankrupt
    7. Force your creditors to take a haircut 
    7. If you are a country : start a war and steal the other country’s assets
    So given that the UK is in a hole why does it want to borrow huge amounts of money to build a high spreed rail link ? 
    Lets not forget that once you are in debt you are obligated to the lender and they can dictate terms etc. So who “holds” all the UK’s increasing debt….I don’t know. But what concerns me is if the referendum fails, then our oil assets may become part of a massive fire sale to repay the UK debts and by doing so, they would most surely snuff out any future desire to be a free country. Thats just one very real possibility if Scotland vote No in the referendum.
     

  76. handclapping
    Ignored
    says:

    Scotland needs the GBP like fish need a bicycle. However with such a strong Balance of Payments the Scottish Thistle SCT would be so strong as to decimate our manufacturing by making it uneconomic. We would need to find some way of sterilising the influx of wealth.
     
    The Oil Fund wouldn’t be just something nice for our children and grand-children, it would be essential to our continued existence as a working nation. Mrs T managed the balancing act by putting workers on the dole and “investing” in London. However London was still part of GBP so the City offshored the surplus. We have to do something similar without putting our remaining workers on the dole, so we need the fund to invest our SCT “offshore”. We could buy back Berwick maybe 🙂 but better do like the Norwegians and invest in productive assets overseas.
     
    As to the accumulated UK debt we should acknowledge rUK as the successor and arrange a schedule of repayments to the rUK avoiding any index-linked debt as not having any say in rUK fiscal or monetary policy we could not guarantee to be able to match the rUK RPI. This means that when the GBP goes down the tube, I reckon about 2018, we can buy up GBP100 bn for a couple of SCT and pay off our share of the debt without harm to Scots except for the problem of our trading partner going broke. Hey ho, better than both of us going broke though.

  77. Bugger (the Panda)
    Ignored
    says:

    @Handclapping
     
    Can I take a different tack?
    Post indie we have an absolute need to a stable currency between the two countries for the following reasons.
    Initially
    The FUKRS have a need t import a BIG % of the food and energy
    England is, at the moment, our biggest export market.
    Scotland is England’s second biggest export market ( Notwithstading  the current dynamics of the very rapidly developing World reality ) so,we NEED a stasis post independence to sort out the trends and en profit.
    England is a net importer of Energy and Food, principally from Scotland.
    We have a mutuality need.
    I favour an alliance of a mutual currency, with no cm9ttments beyond that. If the £ STG goes south, we have no kamikaze requirement to follow them.
     
    So, the same £ but, if not, a hybrid ScotEng £, and at the same time we must put in place a structure for a break out of a A SCOTTISH Bawbee or whatever.
    Long term, Her Mag’s £ stg is, quite stuffed.

  78. Toby
    Ignored
    says:

    Err, you are aware that these are nominal, rather than inflation adjusted, figures? Public spending as a proportion of GDP is falling, and debt as a proportion of GDP is leveling out. 

  79. cynicalHighlander
    Ignored
    says:

    http://www.maxkeiser.com/2013/11/why-is-debt-the-source-of-income-inequality-and-serfdom-its-the-interest-baby-2/
     
    Harun noted in another email, “Governments cannot reduce their debt or deficits and central banks cannot taper. Equally, they cannot perpetually borrow exponentially more. This one last bubble cannot end (but it must).”

    Read more at http://www.maxkeiser.com/2013/11/why-is-debt-the-source-of-income-inequality-and-serfdom-its-the-interest-baby-2/#OXbU6HLJ0koHeJbA.99

  80. Rev. Stuart Campbell
    Ignored
    says:

    “Err, you are aware that these are nominal, rather than inflation adjusted, figures? Public spending as a proportion of GDP is falling, and debt as a proportion of GDP is leveling out.”

    Funny kind of “leveling out”:

  81. Toby
    Ignored
    says:

    Rev. 
    Go and look at the HM Treasury figures in the last budget. Debt to GDP is still rising, but much more slowly than it was, and should plateau in 2015/16 before falling. Putting up nominal charts like this is simply misinformation. 
     

  82. Rev. Stuart Campbell
    Ignored
    says:

    “Debt to GDP is still rising, but much more slowly than it was, and should plateau in 2015/16 before falling.”

    Yeah, because the Treasury’s record of forecasting these things is so stellar.

  83. Toby
    Ignored
    says:

    Rev.
    The recession was deeper and longer than anyone thought. I’m not a big fan of government economic policy at the moment, but recent OBR projections on Public Sector Net Borrowing (PSNB) have been pretty much on the money. 

    Even OBR forecasting failures don’t excuse using nominal value charts like you’ve done in this post. 

  84. Tonia Wight
    Ignored
    says:

    The plot showing an ‘explosion’ in public public spending is meaningless; yes it has increased (exploded is an interesting use of emotive terminology entirely designed to sway opinion and is detrimental to the purpose of this post in my opinion), but so has GDP, population and equivalently a £1 does not buy as much as it used to. This would be far more informative as a fraction of GDP, population or relative to cost of living. It has still gone up I believe, but then we live in the age of the welfare state and that is something to be proud of.

  85. cynicalHighlander
    Ignored
    says:

    Bank debt, now hidden of balance sheets, is 4 or 5 times as large as that so that they can carry on paying those lovely bonuses.   Private debt was about the same as public debt a few years ago and what it is now I have no idea.

  86. tartanfever
    Ignored
    says:

    Toby says:
     
    Rev. 
    Go and look at the HM Treasury figures in the last budget. Debt to GDP is still rising, but much more slowly than it was, and should plateau in 2015/16 before falling. Putting up nominal charts like this is simply misinformation. 
     
    Yeah Rev, how dare you put up charts that show what complete ‘fuckwittery’ we have endured through decades of Westminster mismanagement, all sourced from ..err… official  UK government departments. It’s simply not cricket old chap !
     
    Don’t worry Toby, my 80 year old mother says she fine, she can hang on ’til the ‘2016 plateau’ as you put it, that’ll keep her warm through another hellish winter living off tins of soup and worrying about the electricity bill going through the roof. But she’s resolved to pay off the £1.5 T national debt personally, she’s that kind of salt of the earth can-do woman, you know, the type that have just been shat on for decades by successive Westminster governments. One of the millions that worked their whole lives, never got into trouble, paid her taxes and more than kept up her end of the social contract between citizens and government.
     
    Now she’s being told she’s nothing but a burden – not only by the Westminster Government, but by Labour, by UKIP, the BBC, every single mainstream media outlet and whole raft of arsehole posters on every comments page calling people like her ‘scroungers’.
     
    She can’t watch the news anymore, because every fucking day she’s hears nothing but BBC Scotland going on about ‘the ageing population’, ‘the problem of the elderly’, the ‘crisis  of old age pensions’ and so on.
     
    The other day I walked into the front room and found her in tears watching Jackie Bird on Reporting Scotland repeat some Better Together – Unionist mantra about the ‘elderly problem’.
     
    She said, ‘Why don’t they just give me a pill and I can end it all.’
     
    And that news report was so highly subjective, so obviously manipulated to strike fear at the Scottish voter that it had my mother in tears.

    With this in mind, you can imagine what my message is to you when you come here and complain about misrepresentations of facts and figures. 
     

  87. Toby
    Ignored
    says:

    Tartanfever,
     
    I’m sorry that your mother was upset by the news report – I didn’t see it. But the correct answer to one lot of misinformation isn’t another load of misinformation.

    If there’s a case to be made economically for independence (and I think that there is, marginally in the medium term), then advocates of Yes and their No opponents should use the fairest possible data. 
     
    Of course, it’s not fundamentally about economics but identity. 

  88. handclapping
    Ignored
    says:

    @BtP
     
    I agree 100% with you on the need for GBP parity initially but the problem I see is that rUK is going down the plughole in the not too distant future i.e. before I’m dead, and that is a lot closer than I’m comfortable with! 🙁
     
    It’s like the Titanic; its important to get off the ship but it is also important not to get sucked into the whirlpool as the ship sinks. The cold of the water we cannot do anything about but if we have thought to construct a lifeboat we may well survive. The last thing we want is to have tied our lifeline to the railings

  89. handclapping
    Ignored
    says:

    Does anyone think the officer of the watch who was on duty when the iceberg happened will now rush up to the bridge and salute as the ship goes down? Or do you see him arranging deck chairs and assuring everybody that they are better onboard?

  90. cynicalHighlander
    Ignored
    says:

    Check out this guy.
     
    http://en.wikipedia.org/wiki/City_remembrancer
     
    “Several governments have tried to democratise the City of London but all, threatened by its financial might, have failed. As Clement Attlee lamented, “over and over again we have seen that there is in this country another power than that which has its seat at Westminster.” “
     

  91. Patrician
    Ignored
    says:

    Rev, sorry about this but why are you mentioning the Government’s “Austerity drive” in an article about economics or debt.  the “Austerity drive” has nothing to do with economics and everything to do with political ideology.

  92. David HK
    Ignored
    says:

    You have missed one of the biggest figures. Government workers who think voting no keeps them safe should worry about their pensions.
    The UK government has a GBP 5.1 trillion pension obligation, of which GBP 4.7 trillion is UNFUNDED
    These are figures from the ONS
    The new supplementary table published by ONS in Levy (2012)10 includes the following headline figures for Government pension obligations as at end December 2010:
    ·         Social security pension schemes (i.e. unfunded state pension scheme obligations): £3.843 trillion, being 263 per cent of gross domestic product (GDP) (£3.497 trillion at end of December 2009)
    ·         Centrally – administered unfunded pension schemes for public sector employees (i.e. unfunded public service pension scheme obligations): £852 billion, being 58 per cent of GDP (£915 billion at end of December 2009)
    ·         Funded DB pension schemes for which government is responsible: £313 billion, being 21 per cent of GDP (£332 billion at end of December 2009).
    In summary, the estimates in the new supplementary table indicate a total Government pension obligation, at the end of December 2010, of £5.01 trillion, or 342 per cent of GDP, of which around £4.7 trillion relates to unfunded obligations.
    The only hope of fixing this is voting YES

  93. lumilumi
    Ignored
    says:

    Scary graphs, Rev Stu.

    Should be enough for any Scot to run away from the armageddon that awaits them if they remain part of the UK.

    A small independent country – without the casino banking risk and with real assets (oil&gas, food&drink etc.) – could possibly weather the storm better.

    Finland went through a real shitstorm in the early 1990s after the newly elected rightist government deregulated most of banking and insurance. Student loans and mortgages soared up to 15% or 20%. Crazy times.

    However, we weathered it, and it didn’t last that long.

    Now Finland is in the Eurozone, which keeps my mortgage rate artificially low. Euribor (12 month) + a margin for my bank. I had to go and check. Today I pay 1.92% interest on my mortgage. That’s just silly billy. The Finnish state pays higher interest on its international debt (bonds). I don’t know what the UK government pays on their bonds but they print money and inflation and devalution are going to catch up with them some day. Good luck to that house of cards when it falls down.

    As to my mortgage, I’ve budgeted for 6.5% or 7.0% like it used to be… like it might be again. For now, servicing the mortgage leaves me with some extra money every month. I pay off some capital but also donate to WoS and other good non-political causes.

    I think our interest rates are being kept artificially low to help struggling Eurozone countries and the struggling UK economy.

    Many Finns are quite miffed about it. We personally and our independent country/government collectively husband our money carefully and then we have to pay for southern European prolifigacy – no wonder anti-EU parties are gaining traction in Finland.

    Finland isn’t that perfect. We’ve gone from budget surplus and paying off our national debt into deficit and increasing national debt (under a rightist government, no less!).

    Mainly because the main polical parties power play and can’t agree on things and are unwilling to break old powerbases because they’re scared of losing votes, and they’re making the whole system dysfunctional.

    Let that be a warning. Independent Scotland could become like Finland. All that affordable childcare and free university education malarkey but a PR parliament won’t produce a proper British-style strong government (one party dictatorship).

    So there!

  94. bob
    Ignored
    says:

    One again I repeat; I cannot understand why an Independent Scotland would want to ‘hitch its wagon’ to the ‘basket case’ economy of the UK by sharing the pound. The London Based Governments are totally mismanaging the economy, the National Debt is staggering. We can ditch the debt by dropping plan A and either adopting a Scottish pound (tied to the value of the Euro like Denmark) before joining the Euro when our membership of the European Union is finalised. I trust the German’s to manage the value of our currency far more than London. Looking back over the last 60 years we have seen many slumps in the UK economy, it is boom-bust. If the economy appears to be getting slightly better now in another 8 years there will be another slump. Let’s get off the roller coaster, ditch the pound, and ditch the debt. Some people might feel this is amoral not to take 10% of the National Debt, I think it is just common sense and is exactly what any other country would do and indeed we would gain respect from the financial markets for exercise prudence over sentimentality.

  95. GRAHAM HANSON
    Ignored
    says:

    Debt is not falling. It cannot unless the deficit on current spending is eliminated. Then there is the question of interest rates. How much of our personal debt is at fixed rates? How much floating? Few understand. Few are even interested. The media certainly are not goung to alert anybody to this. Trust me I’m a *anker!

  96. Brotyboy
    Ignored
    says:

    @Graham Hanson

    Edinburgh Uni mid seventies? That one?

  97. GRAHAM HANSON
    Ignored
    says:

    Massive amount of interest here. Pun intended. Low interest rates are an essential government tool. Without them, we would be bust. Before long we shall be moving from interest free deposits to charges for looking after our savings. What could be more reasonable?



Comment - please read this page for comment rules. HTML tags like <i> and <b> are permitted. Use paragraph breaks in long comments. DO NOT SIGN YOUR COMMENTS, either with a name or a slogan. If your comment does not appear immediately, DO NOT REPOST IT. Ignore these rules and I WILL KILL YOU WITH HAMMERS.




↑ Top