Could the government go bankrupt?

[AngelGrinder]

I don't pretend to understand politics, finances etc very well...but was wondering...

The country owns a huge amount of debt....which must be paid...in the recession more and more jobs are being lost, so
a)we are exporting/producing less and
b)are having more and more people on state benefits

Both of these mean less taxes for the government, and higher expenditure into the benefit system.

Add to this the pound getting weaker and weaker...I assume this means the debt is growing?

What happens if the money ran out for the government...could it run out?
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Currently Riding - 2002 Aprilia RSV1000 Mille

[Ste]

[D O G]

At a risk of coming across all 'Itchy style', there is the possibility that a government could no longer borrow any money.

Main borrowing comes from government bonds, which need to be bought by people/institutions. If those people decide that the govt is too risky to lend to, then they will not buy the bonds.

There then is the possibility that the govt could not service its existing debt, or repay it when they fall due (most bonds have a finite term) and so would effectively be bankrupt.

What happens in this case is that the country runs to the IMF (I think, or maybe it is the World Bank), for emergency funding.

Very, very, very unlikely that this would happen to the UK, since our living standard could be severeley eroded - i.e total cut on public spending, large tax hikes etc etc which could allow debt to be serviced, at the expense of totally fucking off the population.

[iooi]

[Wafer_Thin_Ham]

Like Iceland went bankrupt.

https://www.businessweek.com/the_thread/economicsunbound/archives/2008/10/iceland_goes_ba.html
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[Itchy]

No there is a difference, we are insolvent, ie our liabilities exceed our asset base. Most countries run like this...

The total debt figures are mis leading

In that they do not consider assets , the UK holds severan hundred billion assets of USD and tons of African debt

A = assets
B = Liabilities
C = capital

So if assets are 3 trillion
And debt is 2.9 trillion
C means we are in the black by 0.1 trillion

Our asset base is unknown, the liabilities base is also hidden as well so we don't actually know the state of the economy.

The issue is the ability to service debt, currently we pay out in taxes 39bn JUST to pay the interest on debt, thats interest no capital is repaid yet. The total tax take is about 500bn (and falling) hence we pay just over 7.5% on interest payments. Not bad eh? since some people pay 50% of their wages on mortgage payments.

The problem is one of faith, currency requires faith, ie what differentiates the money I print at home vs the money the government prints is faith. Once people loose faith in your currency its over unless drastic action is taken.

If you live in a small country where the total money is £100, if this remains constant then there is no inflation.

But the government prints another £20, two things happen:

#1 it goes into general circulation

#2 it gets taken out of general circulation. say country 2 buys your £20 and keeps it in ITS vaults.

Point 2 is Japan and the US, when Japan printed money the carry trade took the Yen it printed out of circulation immediately (also Japan has things we want to buy say motorbikes and electronics), when the US prints money China usually buys up the dollars, I say usually. As this is changing.


Point 1 is bad, in that the total money swirling around in the economy is £120 and prices increase to reflect this. This is zimbabwe / Yugoslavia / Turkey. In that once the government starts printing money to pay the day to day bills, people lose faith and its a vicious circle.

I.e would you loan £10 to somebody if you only got back £5 (you get your £10 back but it only buys £5 worth of goods).

Hence there is less money taken out of circulation by China and other countries holding your currency. The PRC is pretty annoyed as the 600bn ~ 2000bn USD they hold has been devalued enough to built 13 Nimitz class aircraft carriers.

This means you have to print more money to pay the bills.

You have two choices, hike taxes to pay the bills or print money.

Hiking taxes to crippling levels is unpopular and may have the opposite effect, Ross of Onyabyke got such a massive biz rates bill he closed down. It also loses votes.

Printing money is invisible, ie you still have £10 in your pocket only the purchasing power is diminished and people will blame corporates for being greedy for jacking up prices. But few people notice packet sizes shrink , portion sizes fall but it is the perfect tax as people by enlarge do not notice.

Have a look at various comodities vs the price of gold,

or House prices, house prices in non UK currency have utterly collasped, my mate in HK made a cool 50K on forex by betting against the £,He changed £ at £1 to $1.93 and sold when it hit $1.63 he made 30K in less than 4 months.

Some theorise that the US is already in hyperinflation, China is preempting this by getting rid of its dollar reserves by spending it on infrastructure, Iran and Africa to secure more resources, it is also spending a massive amount of its dollar reserves on weapons.



The current 'crisis' is caused by a loss of confidence tbh, in that in 2007 a Chinese Han class submarine surfaced next to a US carrier battle group, this scared the hell out of the USN command, so as a show of force they sent another carrier battle group for a cruise around Taiwan to intimidate China. China didn't do anything for a few weeks the USN thought they had won.

Then in New York for the US dollar bond auctions the PRC representitive didn't turn up, and the rest that happened is history.


It is starting to look like there is only one way out, a massive war which will make WWII look like a skirmish. China and the Russians anticipate this which is why Russia announced unlimited defence spending and China is upgrading everything.
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Spain 2008France 2007Big one 2009 We all die. The goal isn't to live forever, the goal is to create something that will. In the end, your life will flash before your eyes. Make sure it is worth watching.

[Hetzer]

Physical money is an artificial entity that represents a ficticious construct. It's an illusion that maintains a false reality only so long as people believe what they are seeing.

Money has value only so long as there is stuff available to buy with it.

There are very simple mental exercises you can do in your head to understand money and economics, and thus understand how truly screwed the world's economy actually is. It helps to alter the scale. Eg, take the world, it's billions of people and all it's resources, and scale the lot down to the size of a few villages, with each village having no more than a hundred people each. Give each village it's own natural resources (iron in one, oil in another etc), then give each some food-growing land (different amounts to each, different crops etc). Now set them running. Trading with each other. Standards of living in each. You'll soon see how quickly the wheels fall off IF you suppose capitalistic greed and sky-high expectations for a standard of living.

If every human being on this planet was suddenly given the exact same standard of living as a middle-class person has here in the UK, the world economy would collapse. It would implode. Everyone with the same income...not enough physical resources to provide the goods on which to spend that money, the money becomes instantly worthless, followed by economic collapse.

The world's economy survives on the basis of massively unequal distribution of wealth. For every luxury a single individual has here, nine people elsewhere have to go without a basic need. Broadly speaking. Instead of ten people having one can of beans each per day, one person gets two cans of beans, a packet of crisps, a chocolate cake and a bottle of pop and the other nine people get a handful of rice each and a cup of dirty water.

The scum at the top don't care, leaders of rich countries or poor, so long as they have their luxuries. They'll fight to maintain the status-quo. It's only when the masses under them finally revolt, usually due to actual starvation, that wars start. The status-quo gets disrupted and forces shift. If the chinese population goes into famine and revolts, taking over the leadership, we'll see either a new bunch of leaders who'll immediately try to re-assert the status-quo, thus preventing war, or the new leaders will remain true to their cause and try to grab resources with which to feed their billions, in which case we'll have war.

Our world is on the brink of collapse. Too many people, too few resources. It's being kept staggering along right now, and 99.9% of the people don't see it. But it's a clever illusion. The scum at the top have the most to lose and they'll do absolutely anything they can to keep it going...police-state tactics, enslavement, you name it. So long as they get to keep their luxury houses and luxury cars and the biggest and bestest and mostest of everything.

Because that's the bottom line. Luxurious comfort and pleasure, at any cost.
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"There's the horizon! Ride hard, ride fast and cut down all who stand in your way!"

[c_dug]

But if you were at the top can you honestly say you would do it any differently?

c_dug
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I am a bellend, I am a man of constant sorrow, I am a gummy bear, I am a rock.

[Itchy]

[Kickstart]

[Hetzer]

[LeeR]

There was a very good opportunity a year ago when the banks collapsed to create a new way of doing things, maybe the mythical "third way".

But as Hetzer has pointed out the greed and self-interest kept the current system going.

Throwing non-existent money at the problem, and then more, and then more, and so on...

Iceland now has a national debt that is theoretically (and practically) impossible for them as a nation to ever pay off, when it gets to that point it's ceases to matter.

The old adage rings true, "owe the bank thousands, it's your problem, owe them millions, it's their's"

The governments of the West will continue to preserve their own position while the people of the Rest eat rice.
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My claim to fame: Austin Vince nicked my pen...

[GhostRider]

[pa_broon74]

The thing is...

The civil service and local councils run on budgets, the whole system seems designed to encourage waste because from year to year, if you don't spend your budget, it gets cut. So, you have all these horrid little empire builders chucking money at crap ideas (usually around February and March.

I work for the NHS but have worked in the private sector. We needed a software update, it wasn't urgent, just a glitch fix. I said we'll put a spec together and get a price, my manager said just phone the software house, get a rough price and we'll get it authorised. I said, do you not think it would be better to get an accurate price first instead of giving them a blank cheque? He genuinely didn't understand the concept of getting value for money.

So many civil servants don't. They see at as money already spent, the idea that if money was left over for the 'statue fund' it might be used for the 'cancer drug fund' is totally alien to them.

Local councils are really bad for this. You know it's getting close to the end of the fiscal year when all the hanging baskets appear, you see gangs of Poles out picking a years worth of detritus from the verges and pot holes magically get filled in (although not properly because it they did, they wouldn't be able to waste that excess budgetary money in another 12 months time.)

I would break my hand before tiring from slapping the face of that type of fat officious council bureaucrat who with wobbling jowls insists on spending every last penny of their budget just because they don't want to lose it for the following year, even although there is a reason they still have that money... Because they didn't need it then or the year before that or the year before that etc etc etc et al.

That's my council tax too, I could be spending that on pork pies, sherbet fountains or dark chocolate bounty's...


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Didn't catch anything.

[LeeR]

[Dragonfly]

Loads of people are on the dole around here now as there isnt a job in a 20 mile radius around here, It was on the news and all. No jobs at the job centre. I looked for my brother and we applied for one that was an all over NI driving job and the employer had over 300 applicants applying for it. And unless your a solicator,accountant of surveyor thats about all there is in the paper. People on benefits wont help. I wonder where all the jobs went
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All the breast.
Muzza on Binge:
He's too busy beating the everloving shit out of Lizzie to notice this thread has taken a turn down Drama Avenue and stopped off at the popcorn shop.

[Itchy]

[Dragonfly]

Whats this CV harvesting?

Come here there are accountant jobs and solicators, thats it really. No factorys or shops anymore. Funny though if your on jobseekers to long they can squeeze you in as my brother now has to go and work for his dole money in a shop that could have just taken him on had they not been paid to have him there.


Seriously though theres nothing here not even fake ones. We have ones wrote in polish though, no idea what they are for.
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All the breast.
Muzza on Binge:
He's too busy beating the everloving shit out of Lizzie to notice this thread has taken a turn down Drama Avenue and stopped off at the popcorn shop.

[D O G]

[pa_broon74]

I think the youth unemployment is so bad* because they still believe all the shit their teachers, lecturers and career councillors told them about how to go about getting a job and what they can expect to earn from it.

They need to cut about 50% off what they're told to expect in terms of pay and exagerate like crazy every little point they can on their CV if it's even midly related to the job they're applying for. I wouldn't condone lying outright, but hey, it might be worth a punt.

I would also say, alot of young people need to reassess their career choices taking into consideration their actual abilities. It's a bitter pill to swallow, but if you're just not suited, experienced or qualified enough; you may need to rethink your occupational ambitions. (Of course it doesn't help that this government and others have roundly fucked up the economy making things even harder...)



*Also, some are just bone idle, although that isn't an affliction limited only to the youthful.
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Didn't catch anything.