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Aaa Credit Rating Under Pressure.
The Government's yearly borrowing looks set to hit £130billion, £10billion over Osborne's forecast. There is speculation this would be enough for the Credit Agencies to downgrade our AAA rating. Effectively making it more expensive to borrow money.
Is it now time for a plan B?
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Is it now time for a plan B?
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It is the 'slightly' bit that is the problems.
And we all know what labour's slightly is dont we. We are still suffering from the last labour spending spree.
If labour had invested in infrastructure and business building instead of chucking it on fancy lefty experiments such as multi culture and 5 a day coordinators we would not be in such a mess.
And we all know what labour's slightly is dont we. We are still suffering from the last labour spending spree.
If labour had invested in infrastructure and business building instead of chucking it on fancy lefty experiments such as multi culture and 5 a day coordinators we would not be in such a mess.
How does the decision of a few employees of a couple of ratings agencies make it more expensive to borrow money? The press are obsessed with the agencies' opinion, but does anyone think that it affects the decision of those international operators who lend ? They can read the figures and have minds of their own.
FedPauli
Governments borrow money by selling bonds
If the buyers think there is a greater risk associated with those bonds Governments have to offer greater interest payments to get them to buy the bonds making borrowing more expensive.
Inflation also plays a part - if that goes up what you're going to be repaid on the bond is worth less when it matures and again more interest is needed to offset that.
The credit ratings agencies advise investors by rating the risk
Governments borrow money by selling bonds
If the buyers think there is a greater risk associated with those bonds Governments have to offer greater interest payments to get them to buy the bonds making borrowing more expensive.
Inflation also plays a part - if that goes up what you're going to be repaid on the bond is worth less when it matures and again more interest is needed to offset that.
The credit ratings agencies advise investors by rating the risk
Yes, jake, I understand the mechanics of it all, but my question was why do the press think the ratings' agencies opinion matters. If you were the kind of person or government who dealt in international currency and bought or sold bonds, you'd make up your own mind about the financial state of any country, just as you would with any investment. After all, you wouldn't buy or sell a share because some financial journalist or 'expert' said you should, or rated the company in a particular way. You'd look at the figures yourself and make your own judgment
Well to a certain extent they do but people like Moodies contract out their analysis and expertise and investors buy that.
Not everybody will be big enough to have a department full of financial analysts dedicating their time to looking at the financial viabilities of all the different bonds in all the borrowing countries and corporations to find the best investment opportunities
Not everybody will be big enough to have a department full of financial analysts dedicating their time to looking at the financial viabilities of all the different bonds in all the borrowing countries and corporations to find the best investment opportunities
“…to invest in some infrastructure or house building to stimulate the economy…”
And where, pray, is the dosh to make such investments to come from? Perhaps they will be PFI deals which will see the capital cost of some hospitals built in the last ten years or so amount to some ten times the true cost (just so that the sums can be kept off the government’s books). Or maybe we shall just go and borrow some more cash, hope that we get a few people off “Jobseekers” and as a result get a bit of Income Tax from them.
Most of the jobs created as a result of this stimulation will go to foreign nationals (as was adequately demonstrated when the “amazing opportunities” were presented to the nation by the IOC when they kindly allowed to spend £10bn to stage their games). To cope with this new work we will be told that it is vital that we welcome large numbers of newcomers (once again) to undertake work which the indigenous population will not do. So we will still have large numbers of people languishing in their pits on cold winter’s mornings; we will have a large number of new people to house and who need medical facilities, pensions and benefits; they will have families (either here or “back home”) who will need support; and any benefit from the stimulation will be swiftly negated.
By all means stimulate the economy but it is no use doing so if we are simply to provide the benefits of that stimulation to foreigners. As I have said more than once, it is stupid to pay people to lay in bed and then import foreign labour to undertake vital work.
And where, pray, is the dosh to make such investments to come from? Perhaps they will be PFI deals which will see the capital cost of some hospitals built in the last ten years or so amount to some ten times the true cost (just so that the sums can be kept off the government’s books). Or maybe we shall just go and borrow some more cash, hope that we get a few people off “Jobseekers” and as a result get a bit of Income Tax from them.
Most of the jobs created as a result of this stimulation will go to foreign nationals (as was adequately demonstrated when the “amazing opportunities” were presented to the nation by the IOC when they kindly allowed to spend £10bn to stage their games). To cope with this new work we will be told that it is vital that we welcome large numbers of newcomers (once again) to undertake work which the indigenous population will not do. So we will still have large numbers of people languishing in their pits on cold winter’s mornings; we will have a large number of new people to house and who need medical facilities, pensions and benefits; they will have families (either here or “back home”) who will need support; and any benefit from the stimulation will be swiftly negated.
By all means stimulate the economy but it is no use doing so if we are simply to provide the benefits of that stimulation to foreigners. As I have said more than once, it is stupid to pay people to lay in bed and then import foreign labour to undertake vital work.
Labour claimed there was no structural deficit in the year before the economic crisis i.e 2007 . In fact it was £78 billion !
And their solution ? Go on a spending spree to win the election .
Which is what Gromit suggests now !
#For me, Plan B would be to invest in some infrastructure or house building to stimulate the economy rather than to try and pay off our debts too fastly (and fail at that anyway). #
Typical socialist dogma . Spend, spend, spend, and build up even bigger debts , and that's just plan B . I hate think what C and D might be.
And their solution ? Go on a spending spree to win the election .
Which is what Gromit suggests now !
#For me, Plan B would be to invest in some infrastructure or house building to stimulate the economy rather than to try and pay off our debts too fastly (and fail at that anyway). #
Typical socialist dogma . Spend, spend, spend, and build up even bigger debts , and that's just plan B . I hate think what C and D might be.
Modeller,
Those well known Socialists, the International Monetry Fund are saying it is time to abandon Plan A because it is not working.
http://
Those well known Socialists, the International Monetry Fund are saying it is time to abandon Plan A because it is not working.
http://
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