Re: General Election campaign : Tue Mar 17, 2020 10:25 am  

bren2k wrote:

BA has already said it doesn't need a bail-out - unlike our friend Mr Branson, who is begging for £7.5bn, whilst forcing his staff to take 8 weeks unpaid leave.

Its disgusting - he is an arrogant parasite.

Re: General Election campaign : Tue Mar 17, 2020 1:39 pm  

Sal Paradise wrote:

What are you talking about - the Tories said they would balance the books on operational spending and borrow for capital spending - which is what the budget suggested. If we are to follow the French model then we need to put upwards of £250bn into the economy just for the corona which seems like a good idea - not keen on the likes of Branson who every time he gets into difficulty he wants a hand out - time he stuck his hand in his pocket too.

Whilst the virus is not a great thing in the short term I do think it will re-define how we work - property assets might not be quite the asset they are cracked up to be?

You questioned where increasing SSP would come from - something which would be directly stimulative. But then you blithely suggest that it's a good idea to put £250bn into the economy. Let's play your game then: where's that money going to come from? Come on, balance the books.

Re: General Election campaign : Tue Mar 17, 2020 2:55 pm  

The Ghost of '99 wrote:

You questioned where increasing SSP would come from - something which would be directly stimulative. But then you blithely suggest that it's a good idea to put £250bn into the economy. Let's play your game then: where's that money going to come from? Come on, balance the books.

The government will have to borrow - this is an exceptional situation a bit like the banking crisis - what other option do they have?

Re: General Election campaign : Tue Mar 17, 2020 3:17 pm  

Sal Paradise wrote:

The government will have to borrow - this is an exceptional situation a bit like the banking crisis - what other option do they have?

Borrowing to pay businesses or borrowing to put more money into peoples pockets, who are being told by government not to work.
How long can a bloke feed his family if his wage is cut from £5/600 a week to £96 on SSP.

It will be really interesting to see just how any business bailouts work.
Firstly, any failing business will blame the Coronvirus and try to make some kind of claim and then we have travel companies who are stuffed from the get go and then come, sports clubs, gig venues etc, that have effectively been prevented from trading by the movement guidelines, then the rest of the ecconomy. The impending economic crash will make 2007 look like a bad days trade compared to the utter financial disaster that we are all starring at.
Personally, for those who would get through any infection, say the under 50's, they should still be working, unless they are carers or have vulnerable people living with them.
Halting the ecconomy, for what may be many, many months is going to cause hardship not seen in peacetime.

Why the hell international travel wasn't stopped immediately is a mystery with a cost that has too many numbers to fit on the page.

Re: General Election campaign : Tue Mar 17, 2020 3:21 pm  

wrencat1873 wrote:

Borrowing to pay businesses or borrowing to put more money into peoples pockets, who are being told by government not to work.
How long can a bloke feed his family if his wage is cut from £5/600 a week to £96 on SSP.

It will be really interesting to see just how any business bailouts work.
Firstly, any failing business will blame the Coronvirus and try to make some kind of claim and then we have travel companies who are stuffed from the get go and then come, sports clubs, gig venues etc, that have effectively been prevented from trading by the movement guidelines, then the rest of the ecconomy. The impending economic crash will make 2007 look like a bad days trade compared to the utter financial disaster that we are all starring at.
Personally, for those who would get through any infection, say the under 50's, they should still be working, unless they are carers or have vulnerable people living with them.
Halting the ecconomy, for what may be many, many months is going to cause hardship not seen in peacetime.

Why the hell international travel wasn't stopped immediately is a mystery with a cost that has too many numbers to fit on the page.

I completely agree the money needs to go direct to the individual - but if all the predictions are correct they should only be off work for 14 days not many months so the hardship should be limited. I agree we need to keep working - as an employer the only way I can save guard as many as possible is to keep generating cash. Fortunately the cash that is being collected is from December/January the crunch will come in two months if this slow down continues

Re: General Election campaign : Tue Mar 17, 2020 4:28 pm  

Sal Paradise wrote:

The government will have to borrow - this is an exceptional situation a bit like the banking crisis - what other option do they have?

At the end of 2007/08, tax receipts were worth 37.1% of GDP, and spending was 40.0%, a deficit of 2.9%.
The financial crisis hit in summer 2008 (Northern Rock was the year before so the bailout would have come in the 2007/08 figures).
By the end of 2009/10, when the Conservatives took over, tax receipts were worth 36.1% of GDP and spending was 46.3%, a deficit of 10.2%.

The measures taken to offset the banking crisis increased the budget deficit by 7.3 percentage points. This then fuelled the narrative that Labour had bankrupt the country, had no credibility on managing the public finances, and necessitated a decade of austerity.

At the end of 2019/20, tax receipts were worth 37.7% of GDP, and spending was 39.3%, a deficit of 2.1%.
Not a million miles from where we were in 2007/08 (interesting that we're being taxed more as a share of GDP now than we were under Labour).

This coronavirus shock has the potential to be an even bigger hit to the economy than the banking crisis was - that was basically a shock to one sector (admittedly with ripple effects everywhere else due to tightening of credit). This is a multi-sectoral shock.

Lots of people asking for bailout money and support, for good reason, but look at the politics of it.
We could easily be in a situation where the budget deficit shoots up to 10 per cent again, or even more.

That will cripple the Conservatives' credibility for being sound managers of public finances, just like happened to Gordon Brown.

Now in the short run that won't matter too much as they don't face an election any time soon, but when the shock is over, they will then have to sell to the public a round of savage austerity to get the deficit down again. Will the public be in the mood for austerity, when they were sold Boris' dream of 30,000 new nurses, police and so on, Britain's great future as a sovereign nation.

This is one of those random events that is not the current government's fault (although you can point the finger at predecessor governments for leaving them with deficiencies in the infrastructure to deal with it), but it has the potential to completely overturn the political narrative. It happened to John Major in 1992 when the UK fell out of the ERM - from that point the Tories didn't recapture a poll lead over Labour for 15 years.

If Labour elects Starmer they probably have stumbled on the perfect man for them to take advantage. Unlikely to make gaffes or be toxic in the way that Corbyn was, but also his lack of charisma will be less of a problem in an era of chaos and anger, where people just want to go for the default other option. There may be a similar situation in the US with Biden.

Re: General Election campaign : Tue Mar 17, 2020 5:10 pm  

Sal Paradise wrote:

I completely agree the money needs to go direct to the individual - but if all the predictions are correct they should only be off work for 14 days not many months so the hardship should be limited. I agree we need to keep working - as an employer the only way I can save guard as many as possible is to keep generating cash. Fortunately the cash that is being collected is from December/January the crunch will come in two months if this slow down continues

The big risk with incoming cash is if/ when your customers dont pay.
In normal times, you can adjust cashflow in line with sales and incoming monies.

However, depending on your customer base (unless you are an internet / cash trader, there could well be a domino effect of multiple failures, which unless you have a very cash rich business, could be catastrophic.

The issues for the entertainment industry are truly scary. From pubs, clubs, restaurants, hospitality - the government has effectively shut these businesses down, which is a double whammy.
Usually, in difficult times, it's good to go down to the pub and "put the world to rights" but, that "release" has now been all but taken from us.

Re: General Election campaign : Tue Mar 17, 2020 7:48 pm  

sally cinnamon wrote:

At the end of 2007/08, tax receipts were worth 37.1% of GDP, and spending was 40.0%, a deficit of 2.9%.
The financial crisis hit in summer 2008 (Northern Rock was the year before so the bailout would have come in the 2007/08 figures).
By the end of 2009/10, when the Conservatives took over, tax receipts were worth 36.1% of GDP and spending was 46.3%, a deficit of 10.2%.

The measures taken to offset the banking crisis increased the budget deficit by 7.3 percentage points. This then fuelled the narrative that Labour had bankrupt the country, had no credibility on managing the public finances, and necessitated a decade of austerity.

At the end of 2019/20, tax receipts were worth 37.7% of GDP, and spending was 39.3%, a deficit of 2.1%.
Not a million miles from where we were in 2007/08 (interesting that we're being taxed more as a share of GDP now than we were under Labour).

This coronavirus shock has the potential to be an even bigger hit to the economy than the banking crisis was - that was basically a shock to one sector (admittedly with ripple effects everywhere else due to tightening of credit). This is a multi-sectoral shock.

Lots of people asking for bailout money and support, for good reason, but look at the politics of it.
We could easily be in a situation where the budget deficit shoots up to 10 per cent again, or even more.

That will cripple the Conservatives' credibility for being sound managers of public finances, just like happened to Gordon Brown.

Now in the short run that won't matter too much as they don't face an election any time soon, but when the shock is over, they will then have to sell to the public a round of savage austerity to get the deficit down again. Will the public be in the mood for austerity, when they were sold Boris' dream of 30,000 new nurses, police and so on, Britain's great future as a sovereign nation.

This is one of those random events that is not the current government's fault (although you can point the finger at predecessor governments for leaving them with deficiencies in the infrastructure to deal with it), but it has the potential to completely overturn the political narrative. It happened to John Major in 1992 when the UK fell out of the ERM - from that point the Tories didn't recapture a poll lead over Labour for 15 years.

If Labour elects Starmer they probably have stumbled on the perfect man for them to take advantage. Unlikely to make gaffes or be toxic in the way that Corbyn was, but also his lack of charisma will be less of a problem in an era of chaos and anger, where people just want to go for the default other option. There may be a similar situation in the US with Biden.

The situation is very different and the narrative will also be very different. The banking crisis was simply abuse by rich bankers that could have been controlled if the government hadn't opened the floodgates and allowed banks to behave in such a profligate manner. This is about keeping as many citizens alive and dealing with the fall out of a situation that is not of the governments causation. The situation is very different from the ERM or bank crisis which were in a large part caused by the decisions made by the government.

What would have happened under Labour - these borrowing figures wouldn't have £300bn they would have double/treble as they effectively tried to take the whole economy into public ownership. This may have given short term relief but the long term impact would be catastrophic. They want to pay everyone's rent and wages - that is a big number on top of everything already announced.

Labour's credibility on the numbers was a major factor in their electoral obliteration in 2019 - their current pronouncements shows they have learned any lessons - select Starmer and they will be splendid isolation for a very long time.

Given the whole world looks like they a pumping billions into supporting their populations I would suggest some form of austerity will be common place across the EU - might work to the UKs benefit when discussions with the EU - now that would an interesting externality of COVID 19

Re: General Election campaign : Tue Mar 17, 2020 8:07 pm  

wrencat1873 wrote:

The big risk with incoming cash is if/ when your customers dont pay.
In normal times, you can adjust cashflow in line with sales and incoming monies.

However, depending on your customer base (unless you are an internet / cash trader, there could well be a domino effect of multiple failures, which unless you have a very cash rich business, could be catastrophic.

The issues for the entertainment industry are truly scary. From pubs, clubs, restaurants, hospitality - the government has effectively shut these businesses down, which is a double whammy.
Usually, in difficult times, it's good to go down to the pub and "put the world to rights" but, that "release" has now been all but taken from us.

Most businesses will not have a surplus of cash - having cash is inefficient use of capital. Yes I will have customers who use my money to pay their staff - that is risk we all take in business - managing cash has been focus of my business since day one. The government needs to make changes to monthly VAT, CT in advance, PAYE etc these are the most practical cash injections they can do - arrange with banks finance companies etc to suspend loan/HP repayments for 6 months. It seems to me the loan scheme will be chaos - nice idea but a nightmare to arrange. How long will it take for the money to arrive in bank accounts

Re: General Election campaign : Wed Mar 18, 2020 9:34 am  

Sal Paradise wrote:

Most businesses will not have a surplus of cash - having cash is inefficient use of capital. Yes I will have customers who use my money to pay their staff - that is risk we all take in business - managing cash has been focus of my business since day one. The government needs to make changes to monthly VAT, CT in advance, PAYE etc these are the most practical cash injections they can do - arrange with banks finance companies etc to suspend loan/HP repayments for 6 months. It seems to me the loan scheme will be chaos - nice idea but a nightmare to arrange. How long will it take for the money to arrive in bank accounts

The loan scheme is actually a crazy idea.
The very thought of a business, that has run out of cash and taking on water, then borrowing to see them through an unspecified length of time, would be crazy.
Unless there was an end in sight to the virus problem, many businesses would be better placed to close their doors and liquidate and then perhaps start again when things return to normal.
If the virus issues were just going to be a few weeks then ,this would be different but, unfortunately, this thing isn't going to suddenly disappear, which will leave many businesses floating upside down It's scary, very scary.