It is Obvious

Chris Rick has got altogether too much to say

The Economy

Posted by chrisrick13 on September 24, 2009

It is obvious.  It has been for some very long time.  The (UK) government has borrowed a lot of money on behalf of the nation, probably for very good reasons, and very soon the population has to pay it back.  The spending has to stop and the repayment start soon.  If it does not then we will be hard pressed to find lenders without paying them very high rates of interest.  The high rates to borrow will be because we, the nation, will be hard pressed to pay the interest let alone pay off the loans.

The current plan is that the economy will grow next year and then, with cuts in public spending, there will be money available to pay off the debt.  It is obvious that the economy will not grow next year, or if it does then not by enough.

This will leave cuts as the only way to generate spare money to pay off debts…provided that government income (tax) does not decrease.  (It will.)  Labour and the Conservatives have been playing a game of ‘deny the cuts’.  What is not obvious is why it has been possible to have this game and the UK population to stand meekly by without howling about the state of the economy.

I have not mentioned two other routes to getting out of the mess.  First is to raise taxes.  Alas this seldom increases revenue and won’t here.  The only people left to tax are the very rich and if that happens they will simply disappear with their money.  Second we could export our way out of trouble.  If only we had something to export and there was someone out there to buy it.

Cuts in public spending will not be as effective as they appear on the numbers.  Cuts mean reducing employment in the public sector.  Taxes on the salaries are effectively a discount on spending.  When they are sacked that discount no longer applies and the newly unemployed will increase public spending by drawing social benefits.

It is obvious that this nation has a lot of pain to come.  This prediction does not even consider any environment problems.  Global warming, however caused is coming.  Oil is running out and the UK has a poor prognosis on its energy provisions.  Also, I have not considered the underfunded forward pension commitments both public and private.

It is obvious.  Starting at the general election pain will flow at a high rate.  Many more unemployed.  Deep cuts in public spending.  Much pain which I don’t have the energy to detail here.  Perhaps the government should increase the spending on the police and army by a factor of 10 and then cut deep: people will be on the streets.

Coming is the guide on what to do to survive.  It is obvious.

One Response to “The Economy”

  1. Stuart Honey said

    That was an interesting read, Chris. Not that I would expect anything else from you. I’ll be back for more. All the best.

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