Why? I assume we pay interest? Who to? Who do we loan the money off? What would happen if we said "get f u cked off"?
Yes we pay interest - we now have so much debt that a lot of the taxes raised is used to pay interest on this debt, instead of being invested in public services. The money is borrowed by the treasury issuing guilts, which are Government bonds. These are issued to investors, including pension annuities, foreign corporations and Governments (e.g. the Chinese) in return for a steady rate of interest at very little risk to these investors -as the UK treasury is seen as a good debtor. If we default on these debts, then we would lose our AAA rating and the cost of borrowing soars sky high as investors will seek a much higher return (i.e. larger interest rates) for the increased risk of lending to the UK treasury. We would not be able to afford to borrow money and then we'd be bankrupt as a nation - well and truly fecked. The IMF have already threatened to reduce the UK treasury credit rating if it fails to get a grip on the ridiculous levels of debt this feckless Government has got us into (blagger) Hope that makes sense.
we borrow it off general investment types hedgefunds, pension funds and stuff I think whoever buys them the money is raised by the issue of government bonds which are bought because although the interest we pay is not particularly expensive they are basically rock solid because obviously a govt. will always pay you back as an investor. make of that what you will
So what about US debt? Far in advance of ours! Are the IMF threatening them? Can a country actually go bankrupt? Who is going to come knocking for their brass?
the financial crisis is a major factor.... ... but, unlike most other countries, we never put any of the income in the piggy bank when the economy was booming on a bubble. Increased spending is necessary in a time of recession, but we'd already blown everything we'd collected in taxes. Canada, Norway etc. put some aside and now do not need to borrow so heavily. I've not got a problem with banks paying massive bonuses to their staff, so long as they are allowed to fail. We should have taken the opportunity created by the financial crisis to nationalise all the banks, split out the retail side, so that all our money was protected, from the investment side - that takes the huge risks. All these bright sparks can then earn their million pound bonuses by dreaming up whacky financial products that make money - but if these banks were allowed to fail due to these risks, I suspect they would not be so keen to be so reckless.
RE: So what about US debt? No - because their GDP and economy is so much larger that ours. Also, the US dollar is the world standard currency that it will always be able to attract investment, unlike the pound. The US government is also in deep ***** with regard to debt that the Chinese and other eastern governments are questioning the wisdom of the US dollar as the world standard currency and are now calling for the creation of a new one. If that happens the US treasury is in a big bag of poo. /poo
Nice summing matey, but... unfortunately some on here have their socialist tinted glasses on... and your concise summary will be selectively forgotton a few seconds after the last word is read..... welcome to this message board pal
RE: thanks I've resisted getting drawn into the political arguments on this board for that very reason. (hidebehindsofa)