Burnham

[Beebo]

BBC article on the international bond market.
The AI factor is very concerning.
But Trump is also a massive prick.
https://www.bbc.co.uk/news/articles/c0rez9zegj5o

 

[Psamathe]

Nothing to do with Hormuz and the US regressing to the 1950s while Trump slaps tariffs on everything.

During tonight's news they reported Trümp wanting to rename the Gulf to "Trùmp". And I was amused as all the reports would then become "What's happening in Trūmp is making oil prices high". "Trümp closed by Iran again", etc. He'd be putting his name to a "disaster" that is causing the world a major problem.

 

[Shortfall]

BBC article on the international bond market.
The AI factor is very concerning.
But Trump is also a massive prick.
https://www.bbc.co.uk/news/articles/c0rez9zegj5o

the national finances are in such a parlous state I wouldn't rule it out that Starmer has to go to the country before then (or it might even be Rayner who has to call an early election because it's easy to imagine Starmer being driven out).

I wrote the above a year ago, predicting a change of Prime Minister who might then be forced to go to the country because of a financial crisis.

 

[Psamathe]

I wrote the above a year ago, predicting a change of Prime Minister who might then be forced to go to the country because of a financial crisis.

I'm uncertain. There are a lot of tax raising steps Healey/Burnham can take without increasing cost of living. eg windfall tax on mega oil-company windfall profits from Trūmp's Iranian Oil price increase, bring corporation tax in line with income tax (probably phased), windfall tax on banking windfall profits from unintended consequences of QE. All without breaking any manifest pledges. Most are steps a Labour Party would normally be taking, just that Reeves/Starmer were not making policy but just doing what the lobbyists were telling them to do.

 

[Shortfall]

I'm uncertain. There are a lot of tax raising steps Healey/Burnham can take without increasing cost of living. eg windfall tax on mega oil-company windfall profits from Trūmp's Iranian Oil price increase, bring corporation tax in line with income tax (probably phased), windfall tax on banking windfall profits from unintended consequences of QE. All without breaking any manifest pledges. Most are steps a Labour Party would normally be taking, just that Reeves/Starmer were not making policy but just doing what the lobbyists were telling them to do.

The problem they have is that they're spending too much money. They can basically just print it if they want to but they issue bonds instead to try and maintain confidence in the system and avoid the situation that Zimbabwe and the Weimar Republic faced where their currency became worthless after hyper inflation. If the Bond Markets don't have confidence that the government can pay the interest on their debt then they factor in this risk into their calculations and demand a higher premium for future lending hence why we are paying more to borrow than similar countries and economies around the World. It's basically the lenders telling the government to control it's spending or else. If Burnham thinks the money markets shouldn't be able to hold the country to ransom (as he has said) then I'd like to know how he's going to finance his program of government without causing runaway inflation.

 

[Psamathe]

The problem they have is that they're spending too much money.

I tend to regard "spending too much" as a judgement. They could cut back on spending or they could increase income (eg taxes I mentioned). ie short term critical thing is balancing the books, no deficit and moving into paying off the debt. That can be increased income (tax), decreased spending but probably both.

They have increased spending commitments eg defence and Healey will look very hypocritical if he doesn't increase defence spending to his 3% by 2030 after he in many ways brought down the Starmer Government because they wouldn't fund that now.

Whilst I agree Government seem to be spending too much (compared historic spending) but I can't specifically identify sectors that should or could (short term) be cut (open to suggestions). I do strongly suspect that so many on benefits for health reasons could be addressed by getting them the treatment they need to address their condition and that becomes a win for everybody (they recover. benefit bills lower, productivity starts recovering, etc.) - but reality I basis for that is more suspicion that actual fact or analysis and it is longer term.

 

[Shortfall]

I tend to regard "spending too much" as a judgement. They could cut back on spending or they could increase income (eg taxes I mentioned). ie short term critical thing is balancing the books, no deficit and moving into paying off the debt. That can be increased income (tax), decreased spending but probably both.

They have increased spending commitments eg defence and Healey will look very hypocritical if he doesn't increase defence spending to his 3% by 2030 after he in many ways brought down the Starmer Government because they wouldn't fund that now.

Whilst I agree Government seem to be spending too much (compared historic spending) but I can't specifically identify sectors that should or could (short term) be cut (open to suggestions). I do strongly suspect that so many on benefits for health reasons could be addressed by getting them the treatment they need to address their condition and that becomes a win for everybody (they recover. benefit bills lower, productivity starts recovering, etc.) - but reality I basis for that is more suspicion that actual fact or analysis and it is longer term.

If they borrow to build infrastructure, or to pay for defence for instance that stimulates the economy and creates growth which is a good thing. If they spend it on education or health that is also a good thing because a healthy and educated population is desirable for its own sake but will also eventually create growth. If they borrow to spend too much on welfare of simply to pay interest on money they have already borrowed (look it up it will make your eyes water) then this is a drag on the economy and on growth. This where we are now. Although governments worldwide are borrowing more than ever, Investors are demanding a higher rate of return to lend to the UK. As has happened before, this can lead to a debt spiral where financing the program of government becomes unaffordable and you end up with a financial crisis and austerity is forced upon you. And that's real austerity, not the kind that George Osbourne inflicted on us, real terms cuts in expenditure right across government, existing pensions and public sector wages being cut for instance. The EU forced this on Greece a few years ago which anyone can look up if they're interested. It won't be pretty.

 

[All uphill]

I tend to regard "spending too much" as a judgement. They could cut back on spending or they could increase income (eg taxes I mentioned). ie short term critical thing is balancing the books, no deficit and moving into paying off the debt. That can be increased income (tax), decreased spending but probably both.

They have increased spending commitments eg defence and Healey will look very hypocritical if he doesn't increase defence spending to his 3% by 2030 after he in many ways brought down the Starmer Government because they wouldn't fund that now.

Whilst I agree Government seem to be spending too much (compared historic spending) but I can't specifically identify sectors that should or could (short term) be cut (open to suggestions). I do strongly suspect that so many on benefits for health reasons could be addressed by getting them the treatment they need to address their condition and that becomes a win for everybody (they recover. benefit bills lower, productivity starts recovering, etc.) - but reality I basis for that is more suspicion that actual fact or analysis and it is longer term.

I sometimes think that I am the only person who sees our prison population as a huge financial drain. About £60k per year per prisoner. If we could devise restorative programmes that would reduce future offending, and if those programmes cost, say, £20k per prisoner it would help.

I'd also be keen to support refugees in joining the job market and paying tax.

 

[Psamathe]

If they borrow to build infrastructure, or to pay for defence for instance that stimulates the economy and creates growth which is a good thing. If they spend it on education or health that is also a good thing because a healthy and educated population is desirable for its own sake but will also eventually create growth. If they borrow to spend too much on welfare of simply to pay interest on money they have already borrowed (look it up it will make your eyes water) then this is a drag on the economy and on growth. This where we are now. Although governments worldwide are borrowing more than ever, Investors are demanding a higher rate of return to lend to the UK. As has happened before, this can lead to a debt spiral where financing the program of government becomes unaffordable and you end up with a financial crisis and austerity is forced upon you. And that's real austerity, not the kind that George Osbourne inflicted on us, real terms cuts in expenditure right across government, existing pensions and public sector wages being cut for instance. The EU forced this on Greece a few years ago which anyone can look up if they're interested. It won't be pretty.

But I raised the option about increasing income (tax) to balance the books. To me it's not just borrowing but balancing expenditure with income. You seem to only be considering the option of borrowing more rather than a balance with increasing income through tax increases.

 

[Rusty Nails]

I sometimes think that I am the only person who sees our prison population as a huge financial drain. About £60k per year per prisoner. If we could devise restorative programmes that would reduce future offending, and if those programmes cost, say, £20k per prisoner it would help.

I'd also be keen to support refugees in joining the job market and paying tax.

‘if’ doing a lot of heavy lifting there.

 

[Psamathe]

I sometimes think that I am the only person who sees our prison population as a huge financial drain. About £60k per year per prisoner. If we could devise restorative programmes that would reduce future offending, and if those programmes cost, say, £20k per prisoner it would help.
...

I agree but also, whilst I'm not very familiar with out courts/sentencing/etc. many commentators raise the sentence inflation from politicians wanting to appear "tough on crime". Many say that like for like offences result in longer prison sentences in the UK than in other western comparable countries.

 

[Shortfall]

But I raised the option about increasing income (tax) to balance the books. To me it's not just borrowing but balancing expenditure with income. You seem to only be considering the option of borrowing more rather than a balance with increasing income through tax increases.

If they tax too much it kills growth, particularly if it's spent financing debt, welfare or the bloated and inefficient government rather than on infrastructure etc.

 

[Psamathe]

If they tax too much it kills growth, particularly if it's spent financing debt, welfare or the size of government rather than on infrastructure etc.

I agree hence it being a balance. But there are taxes that can be increased without killing growth. Those benefitting from those loopholes will cry outrage and threaten to emigrate but reality is investment is international these days and has little to do with what country you a resident in (the majority of my personal investments are not in the UK but overseas). Similarly business people operate where they can run a business and considerations like language, opportunities, local market knowledge are major considerations.

 

[Shortfall]

I agree hence it being a balance. But there are taxes that can be increased without killing growth. Those benefitting from those loopholes will cry outrage and threaten to emigrate but reality is investment is international these days and has little to do with what country you a resident in (the majority of my personal investments are not in the UK but overseas). Similarly business people operate where they can run a business and considerations like language, opportunities, local market knowledge are major considerations.

I'm afraid that "taxing the rich" isn't the pancea some people think it is. I guess we might have to find out the hard way.

 

[Psamathe]

I'm afraid that "taxing the rich" isn't the pancea some people think it is. I guess we might have to find out the hard way.

Maybe not but it would help (given there is no one answer).

But even short term there is a lot to offset the defecit eg hydrocarbon companies are currently enjoying a windfall profits entirely because Trūmp's Iran misadventure has pushed the price of oil through the roof (and their extraction costs remain unchanged) - windfall profits not from any investment or business decisions, etc. Some banks are enjoying windfall profits from unintended consequences from QE ie nt from any business operations by the banks (and that's windfall for the banks coming directly from taxpayer funds). And that's income without "taxing the rich".