IMF - The UK can afford to live with a high debt forever

jcafcwjcafcw Posts: 11,282
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http://www.telegraph.co.uk/finance/economics/11644471/Britain-can-afford-to-live-with-high-debt-forever-says-IMF.html

They have stated that cutting the debt could actually do more harm than good to our economy. This seems to be a complete face turn from their calls for austerity.
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  • BrokenArrowBrokenArrow Posts: 21,665
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    jcafcw wrote: »
    http://www.telegraph.co.uk/finance/economics/11644471/Britain-can-afford-to-live-with-high-debt-forever-says-IMF.html

    They have stated that cutting the debt could actually do more harm than good to our economy. This seems to be a complete face turn from their calls for austerity.

    What do they say about Greece?

    Oh look

    http://www.theguardian.com/business/2015/jun/02/greek-debt-talks-bailout-imf-merkel-g7-summit
  • jcafcwjcafcw Posts: 11,282
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    Their point is that it depends on the country. As we can create our own currency we are better off than countries in the Euro.

    It all comes down to whether you believe the IMF are talking rational economic sense or not.
  • MartinPMartinP Posts: 31,358
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    The flaw in that thinking is of course that there will be further shocks to the country's economy as the economic/credit cycle ends. If we never reduce the level of debt then it will keep on increasing with each crisis until it becomes unbearable and the country is bankrupt.
  • BrokenArrowBrokenArrow Posts: 21,665
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    jcafcw wrote: »
    Their point is that it depends on the country. As we can create our own currency we are better off than countries in the Euro.

    It all comes down to whether you believe the IMF are talking rational economic sense or not.

    Well, it only works if we can keep our bond rates at 2%, imagine if we had another economic shock and our bond rates went to the more normal 5% or even 10%.

    Those £50bn interest payments are then on their way to becoming £100-£150bn, we are then talking about the end of the NHS.

    Call me old fashioned, but I think that is a risk too big to be worth taking.
  • David TeeDavid Tee Posts: 22,833
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    LOL.

    Page 1 disclaimer of the report.
    DISCLAIMER: This Staff Discussion Note represents the views of the authors and does not necessarily represent IMF views or IMF policy. The views expressed herein should be attributed to the authors and not to the IMF, its Executive Board, or its management. Staff Discussion Notes are published to elicit comments and to further debate.


    /thread closed
  • [Deleted User][Deleted User] Posts: 2,115
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    David Tee wrote: »
    LOL.

    Page 1 disclaimer of the report.




    /thread closed

    So what? It's still the view of some leading economists at the IMF…

    Jonathan D. Ostry – Deputy Director of the Research Department (RES) at the International Monetary Fund.

    Atish Rex Ghosh – Assistant Director, and Chief, Systemic Issues Division, in the Research Department of the International Monetary Fund.

    Raphael Espinoza – Economist in the Research Department (Systemic Issues Division) at the IMF.


    But hey, guess what, this particular economic expert would care to disagree with them…
    David Tee, CSE Woodwork (Planks), from the DS Politics Forum

    :D
  • Ethel_FredEthel_Fred Posts: 34,127
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    Many of the financial problems you see today - housing costs, agency costs, potholes, lack of trained people, etc - have arisen from a belief that all debt is Evil therefore cutting is the only option. Judious spending in the past would have saved more money overall on the principle of a penny of prevention is better than a pound of cure.
  • David TeeDavid Tee Posts: 22,833
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    So what? It's still the view of some leading economists at the IMF…

    Jonathan D. Ostry – Deputy Director of the Research Department (RES) at the International Monetary Fund.

    Atish Rex Ghosh – Assistant Director, and Chief, Systemic Issues Division, in the Research Department of the International Monetary Fund.

    Raphael Espinoza – Economist in the Research Department (Systemic Issues Division) at the IMF.

    But hey, guess what, this particular economic expert would care to disagree with them…
    David Tee, CSE Woodwork (Planks), from the DS Politics Forum

    :D

    Thanks for the insult. FWIW it's worth I'm the last person you should ever employ to do any woodwork. I don't pretend to be an expert (and I'm most certainly not) - but unlike you at least I have the nous to read something when it's put in front of me.

    :D

    Your attempt at ignoring the one and only disclaimer in the report (so important it's pretty much the first thing they say) - which clearly states that the report should not be attributed to the IMF - is risible.

    :D

    Why? Because the world is full of economists that disagree. For every one that says one thing, you can find another that says the polar opposite. But that's not the story here, is it? The story is that "Britain can afford to live with high debt 'forever', says IMF"

    Only they don't. And it's not even a formal paper your blessed economists have written, it's a discussion note.

    :D
  • [Deleted User][Deleted User] Posts: 2,115
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    David Tee wrote: »
    Thanks for the insult. FWIW it's worth I'm the last person you should ever employ to do any woodwork. I don't pretend to be an expert (and I'm most certainly not) - but unlike you at least i have the nous to read something when it's put in front of me.

    :D

    Your attempt at ignoring the one and only disclaimer in the report (so important it's pretty much the first thing they say) - which clearly states that the report should not be attributed to the IMF - is risible.

    :D

    Why? Because the world is full of economists that disagree. For every one that says one thing, you can find another that says the polar opposite. But that's not the story here, is it? The story is that "Britain can afford to live with high debt 'forever', says IMF"

    Only they don't. And it's not even a formal paper your blessed economists have written, it's a discussion note.

    :D

    I never sought to ignore the disclaimer (obvious straw man alert), merely to point out that the ‘note’ is still the work of leading economists – not armchair ones like you or me.

    And if you want to blame someone for the misinterpretation, I suggest you write to your beloved Telegraph.
  • [Deleted User][Deleted User] Posts: 2,115
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    Anyhow, back on topic, I've suggested this previously: that a long-term debt of a manageable scale is perfectly feasible without said country getting into financial difficulties. Indeed, that seems to have been the case for most major economies over many decades. Which kind of proves the point.
  • David TeeDavid Tee Posts: 22,833
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    I never sought to ignore the disclaimer (obvious straw man alert), merely to point out that the ‘note’ is still the work of leading economists – not armchair ones like you or me.

    And if you want to blame someone for the misinterpretation, I suggest you write to your beloved Telegraph.

    Of course you ignored the disclaimer - you charged headfirst into pitting me against three leading economists by saying I disagreed with them. Which was news to me because I did no such thing. I simply pointed out that the report was emphatically and categorically NOT the views of the IMF, the primary thrust of the story.

    What strawman btw?
  • [Deleted User][Deleted User] Posts: 9,720
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    MartinP wrote: »
    The flaw in that thinking is of course that there will be further shocks to the country's economy as the economic/credit cycle ends. If we never reduce the level of debt then it will keep on increasing with each crisis until it becomes unbearable and the country is bankrupt.

    That is exactly what has happened in Japan.
  • [Deleted User][Deleted User] Posts: 9,720
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    David Tee wrote: »
    LOL.

    Page 1 disclaimer of the report.


    /thread closed

    "Notes are published to elicit comments and to further debate."

    Thread reopened.
  • [Deleted User][Deleted User] Posts: 2,115
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    David Tee wrote: »
    Of course you ignored the disclaimer - you charged headfirst into pitting me against three leading economists by saying I disagreed with them. Which was news to me because I did no such thing. I simply pointed out that the report was emphatically and categorically NOT the views of the IMF, the primary thrust of the story.

    Fair enough. However, I didn't appreciate the nature of your first post, which IMHO sought to both belittle the OP and shut down discussion on the topic.
  • grassmarketgrassmarket Posts: 33,010
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    So what? It's still the view of some leading economists at the IMF…

    It stands to reason that some percentage - maybe a majority - of all leading economists everywhere at all times must be completely and utterly wrong about everything.
  • Aurora13Aurora13 Posts: 30,243
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    It stands to reason that some percentage - maybe a majority - of all leading economists everywhere at all times must be completely and utterly wrong about everything.

    Finding an economist to justify what you personally think is quite easy. They have the whole spectrum covered! No different to saying that an MP utterance represents UK Parliament view. Free to say whatever they want but it a personal view not that of the institution.
  • [Deleted User][Deleted User] Posts: 2,115
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    It stands to reason that some percentage - maybe a majority - of all leading economists everywhere at all times must be completely and utterly wrong about everything.

    Not when they appear to be stating the bleeding obvious, however: that a country can continue with a certain level of public debt without necessarily ever running into difficulties servicing it – something that most major economies have been doing for decades.
  • David TeeDavid Tee Posts: 22,833
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    Fair enough. However, I didn't appreciate the nature of your first post, which IMHO sought to both belittle the OP and shut down discussion on the topic.

    So you responded by both misrepresenting what I said and making disparaging comments. And you want to pull me up for belittling people...

    I made no comment (you really need to read these things properly) about anything the OP said - so quite how you formed your HO I have no idea. I simply reposted what the disclaimer said, from which any fule could then work out that these were not the views of the IMF. I also posted it as a joke (first line in case you didn't read that bit either). I found it funny - still do - that something could be so obviously distorted.

    In case you're curious - it always pays to read IMF documents. This is an organisation that rarely sings from the same hymn book. Half of them say one thing, the other say something else entirely. Lagarde appears to have final say on the matter and on this issue, it's probably worth waiting to see if she has any comment.
  • SULLASULLA Posts: 149,789
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    The more debt you can pay off, the less you pay in interest.
  • LyricalisLyricalis Posts: 57,958
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    SULLA wrote: »
    The more debt you can pay off, the less you pay in interest.

    OK, I'll suggest to my brother that he reduces his food consumption to starvation levels so he can use that money to pay off his loan more quickly. That's what you're suggesting the country do, right?
  • David TeeDavid Tee Posts: 22,833
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    Lyricalis wrote: »
    OK, I'll suggest to my brother that he reduces his food consumption to starvation levels so he can use that money to pay off his loan more quickly. That's what you're suggesting the country do, right?

    Now THAT'S a Strawman....
  • Alan1981Alan1981 Posts: 5,416
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    Music to the ears of the Labour party supporters. Benefits for all on the never never.
  • RaferRafer Posts: 14,231
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    A debt isn't a debt as long as you can keep up the repayments. While we can service the debt at present, and servicing the debt is about the same as defence spending, we're ok and can "shrink" it away with growth. But: the second the economic cycle changes and we go into recession, and we will at some point, then the debt becomes unserviceable and we head towards Greece. We need to reduce the deficit first, then start chipping away at the debt. That's why austerity is critical. If we don't then the next recession will be a lot worse than the last.
  • psy7chpsy7ch Posts: 10,715
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    Over 50% of tory party donations come from The City of London

    http://www.independent.co.uk/news/uk/politics/revealed-how-the-city-bankrolls-tory-party-2208668.html

    and David Cameron has stated The age of austerity is not just a passing phase and Britain should get used to having a ‘permanently’ smaller state

    http://www.dailymail.co.uk/news/article-2501697/Cameron-Austerity-Britain-used-leaner-efficient-state.html

    it is not surprising that this austerity narrative keeps getting pushed. It is ideological.
  • mungobrushmungobrush Posts: 9,332
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    Alan1981 wrote: »
    Music to the ears of the Labour party supporters. Benefits for all on the never never.

    Borrowing money to finance capital projects is "good debt"
    This is because the return on the investment project is greater that the cost of borrowing money

    Borrowing money to pay for day to day expenses is "bad debt"
    This is because you are spending money that you cannot afford.
    Using debt to pay benefits for example, is like taking out money on your credit card to buy food
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