XBrettKennyX wrote:
WHY are public sector interest rates so low? It's precisely because the money markets have confidence in the economic measures that are being implemented.
The idea we are getting low interest rates on government borrowing is down to this one factor is simplistic nonsense. A huge reason interests rates are so low for governments is there is no confidence that the private sector is any place to put your money. Long term yields in the USA are negative yet they can still borrow money as the lenders are in effect prepared to pay a premium for the US government to look after their money. It is a similar situation with the other big economies. Even France is seeing their rates drop. All across the world governments such as France, the UK, Germany, Japan, and Austria have never been able to borrow so cheaply and they are all are not following the UK governments austerity policy. Some the opposite. The idea the UK can borrow cheaply is as a direct consequence of the pin prick of a difference the austerity policies have made is a joke.
I find it amusing that the left wingers try and pick holes in what is obviously correct.
I find it amusing right wingers take such simplistic views.
Why on earth would the Coalition government want to impose such fiscal prudence if it wastn't deemed absoulutely necessary, knowing that it will make themselves more unpopular?
Because they have a political agenda. Shrinking the size of the state is a political agenda. The Tories are using the crisis as an excuse to do this. They have been doing this from day one aided by the Lib Dems for the reasons the Guardian article mentions. One of the main points the article is trying to make is doing this at this time is stupid. That is given it costs next to nothing for the government to borrow money it makes no sense to try and get private money into the economy when it is going to cost the private sector
more to borrow it. It is much more sensible for the government to fund infrastructure investment directly by borrowing cheaply than asking the private sector to raise the cash to do so as they would have to pay higher interest rates meaning when the cost eventually gets passed on we pay more in the end.
We have tried the Labour policiy of "buying votes with other peoples money". It doesn't work and has left us with an unprecedented debt.
Nonsense. The national debt was being managed in exactly the same way by both parties. In the 1950's it was about 240% of GDP and steadily fell under both Labour and Tory governments until about the mid-70's when it levelled off to something under 50% of GDP and stayed around that figure or less until 2008 (it was a mere 35% of GDP then). The deficit was also on a par as far as both parties go pre-2008. What changed the game was the 2008 financial crisis which has since led us to be running huge deficit ever since as this government struggles to get it down. So the national debt is now about 65% of GDP
and rising despite
current policies.
