The National Debt Clock

[Anomalocaris]

Pardon the ignorance, but was Britain running a large budget deficit before the liquidity crisis in 2008?? If not, then how was excessive spending to blame?

Also, government spending and capitalism are hardly incompatible except when one regards capitalism as a code word for certain ideology rather than as a system for concentrating and allocating the economic resource and potential of the economy. Government is a player in the capitalist economy. Granted it is one with some unique strengths and powers, but other players have these as well. Statist capitalism, where the state applies itself to be biggest player in the capitalist system, had a mixed track record. But the best examples are hardly less impressive than any examples to be gleamed from those where government really did play much smaller roles in the economy.

[Tiberius]

Dosen't capatilism require growth, hence spending, to operate correctly?

It requires growth in the private sector. Government spending is the public sector. By decreasing the public sector, and shifting more jobs into the private sector, the current UK government is fueling the free market, whilst simultaneously cutting back on their spending. The private sector is growing; the public sector is shrinking. Less for the government to pay, and more opportunities for capitalism to work with.

Yes, an incompetent Government using an incompetent sysytem! A Government can only be as strong as its sysytem.

The government for the past 13 years moved gradually away from capitalism. I fail to see how moving away from an "incompetent" system can make things worse. As Shinylight said, this had nothing to do with capitalism or socialism; it had everything to do with ridiculous spending by the government.

Um do the terms the terms 'banking crisis' and 'toxic debt' ring a bell.
The crisis was caused by unrestrained capitalism and wide boy chancers making a quick buck at the expense of the rest of us.

It had nothing to do with capitalism. Capitalism didn't fail; the banks did. When you have a business and you are letting your finances get out of control, you have a bad business. Capitalism predicts that such a business will fail (and most would have), but the government decided that banks were "too big to fail" and bailed them out, going completely against the market. You say unrestrained capitalism was the problem; I say the government getting involved by bailing out companies that should have been left to die was the problem. This isn't to say that regulation shouldn't exist, but when a company fails, nobody should be responsible for bailing it out other than the shareholders. It isn't fair to the rest of us.

We had to bail them out apparently, I would have been more inclined to let them fail and pick the pieces afterwards.

We would be still stuffed but at least the rich bastards wouldve been made to pay for their banditry rather than being cushioned by vast amounts of money from us normal workers.

Exactly. We would have suffered; I agree, but it was a risk we took by opening up an account with a bank. Banks aren't fun places where you can store your money for free; they are risky businesses and you risk losing it all. Most of the time, nothing happens, but ultimately it is all down to the bank what they decide to do with your money. If you don't want the risk, don't put your money in a bank...simple.

Pardon the ignorance, but was Britain running a large budget deficit before the liquidity crisis in 2008?? If not, then how was excessive spending to blame?

Yes. Here is a graph showing Britain's budget deficit for the last 30 years:



When Labour took over in '97, the Tories had just managed to balance it, and indeed we were in the positive for a few years of New Labour. Then in 2001, the spending started, and by the end of the year, we were in the red again. So yes, we were running a large budget deficit before 2008, thanks to New Labour and it's policy of "spend spend spend". Source: http://www.debtbombshell.com/britains-bu...eficit.htm

The Tories and the Lib Dems seem to have their heads screwed on right. I'm glad I voted for them.

[Jaysyn]

We would be still stuffed but at least the rich bastards wouldve been made to pay for their banditry rather than being cushioned by vast amounts of money from us normal workers.

We (the USA) would have spiraled into a depression that made the 30's look like a pleasure cruise. If anyone else has an idea how we could have avoided a depression & a bailout, after the fact, I'd love to hear it.

[Anomalocaris]

We (the USA) would have spiraled into a depression that made the 30's look like a pleasure cruise.

Maybe you should reexamine your calculations.

[Jaysyn]

We (the USA) would have spiraled into a depression that made the 30's look like a pleasure cruise.

Maybe you should reexamine your calculations.

The consensus of economists and policymakers at the time of the original TARP was that the U.S. government couldn’t afford to experiment with an economic collapse. That view in mainstream economic circles has, if anything, only hardened with the program’s success in recouping the federal spending.

A study this summer by former Fed Vice Chairman Alan Blinder and Moody’s chief economist Mark Zandi was representative of that consensus. They projected that without federal action — TARP and the stimulus — America’s gross domestic product would have fallen more than 7 percent in 2009 and almost 4 percent in 2010, compared with the actual combined decline of about 4 percent.

“It would not be surprising if the underemployment rate approached one-fourth of the labor force,” they wrote of their scenario. “With outright deflation in prices and wages in 2009-11, this dark scenario constitutes a 1930s-like depression.

Back in 2008, that view was persuasive. Republicans like McConnell and Blunt swallowed their distaste for government action and persuaded their colleagues to vote with them for TARP. Liberals like House Speaker Nancy Pelosi and Massachusetts Rep. Barney Frank swallowed their dislike of Bush and distrust of the bankers.

Source

No one can really be sure exactly what would have happened, but I do realize that just about every small contractor in the US would have been put out of business. We are the ones that use a line of credit to get a job done & then get paid after we complete the project. I know for an absolute fact that the 25 year old private engineering firm that I've worked for for the past 15 years would have gone under from the ensuing credit freeze.


Zandi: Financial rescue and stimulus responsible for saving or creating 8.5 million jobs

Timmermann: Everyone hates it, but the TARP bailout worked

I hope we as a nation have learned our lesson & never let our economic leaders put us back in a similar position.

[ib.me.ub]

It had nothing to do with capitalism. Capitalism didn't fail; the banks did. When you have a business and you are letting your finances get out of control, you have a bad business. Capitalism predicts that such a business will fail (and most would have), but the government decided that banks were "too big to fail" and bailed them out, going completely against the market. You say unrestrained capitalism was the problem; I say the government getting involved by bailing out companies that should have been left to die was the problem. This isn't to say that regulation shouldn't exist, but when a company fails, nobody should be responsible for bailing it out other than the shareholders. It isn't fair to the rest of us.

The banks failed and the Govenment bailed them out!

Well if you cannot see that the public & private sectors are so intertwined now, they cannot be unwoven. If you cannot see this, you cannot see the forest for the trees!

Why did the Governments bail out the banks then Adrian? If the public & private systems are seperate, it should make no difference. The fact is, they rely upon one another. If one fails then so does the other.

It requires growth in the private sector.

It had nothing to do with capitalism. Capitalism didn't fail; the banks did.

Banks using a Capatilist sysytem which requires growth. Growth that is impossible to sustain forever. If the banks are using a different system or are not a public entity, please fill me in.

If you don't want the risk, don't put your money in a bank...simple.

Yes, really simple. Where do you keep your money, under you pillow.

[Tiberius]

The banks failed and the Govenment bailed them out!

Yes, and I believe they had no right to bail them out. So many small businesses fail each year, and nobody gives a crap about them...the government doesn't save them. Why? Because it's the natural whim of the market; evidently something was wrong with the business plan of the company. Several big businesses fail each year as well (Woolworths in the UK is a good recent example), but the government isn't called in to bail them out either, for the same reason.

Well if you cannot see that the public & private sectors are so intertwined now, they cannot be unwoven. If you cannot see this, you cannot see the forest for the trees!

Please explain how the sectors are "so" intertwined, and how they cannot be unwoven. If I create a company, it is in the private sector. By your argument, it would also be in the public sector ("so" intertwined), but that simply isn't true. Perhaps you think that the government being a client of a private sector business means that the sectors are combined...well you'd be wrong. The government itself is an entity that is no different from any other consumer in the free market. Many government contracts go out to private companies; if the government didn't, they'd be in a nasty position.

Why did the Governments bail out the banks then Adrian? If the public & private systems are seperate, it should make no difference. The fact is, they rely upon one another. If one fails then so does the other.

The government bailed out the banks to protect the economy. By doing so, they overruled the market and sent a message to all businesses: "Hey guys! If your business is so successful that it affects a large proportion of the population, and you start failing, we'll bail you out!". Great. So now what we've done is given all companies an excuse to be lax about their own self-regulation. In the free market, nobody guarantees your survival but the consumers & shareholders.

Banks using a Capatilist sysytem which requires growth. Growth that is impossible to sustain forever. If the banks are using a different system or are not a public entity, please fill me in.

I never said a company needs growth forever; that would be absurd. It is of course, very good if the company can boast continual growth over the years, but this is rarely the case. Usually you have some bad years, and some good years. If you can perfect your company with self-regulation, you can make some guarantees about the state of your growth (i.e. you can take several years of loss, and still make it up).

In theoretical models of capitalism, you would probably end up with some "steady state" after while, with the consumer base split between several different companies. In practice, this never happens, because all companies are run by humans (and humans make mistakes).

Yes, really simple. Where do you keep your money, under you pillow.

It's a simple enough idea. I never said it was simple in practice. We do rely on banks to an extent, but far too many people view them as a place to store their money without any bad things happening to it. These people have no clue about what a bank is, or how the market operates. There is always risk involved with any transaction on the free market (or any market, you could argue). People who ignore the risk and then complain about it afterwards do not have any respect from me.

[Jaysyn]

Please explain how the sectors are "so" intertwined, and how they cannot be unwoven. If I create a company, it is in the private sector. By your argument, it would also be in the public sector ("so" intertwined), but that simply isn't true. Perhaps you think that the government being a client of a private sector business means that the sectors are combined...well you'd be wrong. The government itself is an entity that is no different from any other consumer in the free market. Many government contracts go out to private companies; if the government didn't, they'd be in a nasty position.

A supposedly true anecdote that I read on Slashdot. I may have forgotten one or two details, but it made amazing sense when I read it.

Say there is a smallish manufacturing company in the US, they do still exist, you know. Basically all this small company manufactures are ball bearings. Let's call them Bearing Co since the original poster didn't name the company (his father worked for them). They are very, very good at what they do. They have insinuated themselves as the main ball bearing supplier for two of the American auto manufactures. Now this market is nice & niche, but it's not quite big enough on it's own to keep the factories running. Manufacturing is expensive. Bearing Co. also makes ball bearings for the US Navy, Boeing, etc. Highly precise bearings that are used in things like submarine props, aircraft carriers & F-18s. They may not be the only US manufacturer of ball bearings, but they are the only ones that are certified to make these military grade & sometimes top secret ball bearings. Having customers on both sides of the civilian / military fence is the only way Bearing Co. can keep it's factories running. If it's civilian side loses it's one of it's big auto manufacturer accounts, the company folds. If the company folds & the military can no longer get these highly precision ball bearings for their hardware, (and getting them from overseas is not an option, things like the vibration resistant parts that go into sub props are still top secret) then you have a national security issue.

Given this example, what would you have done in the USA's shoes? Now remember this isn't the only manufacturer in the USA that is in this position, you potentially have dozens if not hundreds of companies in similarly chaotic situations.

Also, keep in mind that the US Government are still the ones buying these parts in the end, so just raising the hardware prices across the board is probably not a viable long-term solution in keeping cost down.

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In theoretical models of capitalism, you would probably end up with some "steady state" after while, with the consumer base split between several different companies. In practice, this never happens, because all companies are run by humans (and humans make mistakes).

Interesting thought. What happens to Capitalism when they start letting AI run companies. Weak AI is already running the stock markets.

[Skipper]

Please explain how the sectors are "so" intertwined, and how they cannot be unwoven. If I create a company, it is in the private sector. By your argument, it would also be in the public sector ("so" intertwined), but that simply isn't true. Perhaps you think that the government being a client of a private sector business means that the sectors are combined...well you'd be wrong. The government itself is an entity that is no different from any other consumer in the free market. Many government contracts go out to private companies; if the government didn't, they'd be in a nasty position.

A supposedly true anecdote that I read on Slashdot. I may have forgotten one or two details, but it made amazing sense when I read it.

Say there is a smallish manufacturing company in the US, they do still exist, you know. Basically all this small company manufactures are ball bearings. Let's call them Bearing Co since the original poster didn't name the company (his father worked for them). They are very, very good at what they do. They have insinuated themselves as the main ball bearing supplier for two of the American auto manufactures. Now this market is nice & niche, but it's not quite big enough on it's own to keep the factories running. Manufacturing is expensive. Bearing Co. also makes ball bearings for the US Navy, Boeing, etc. Highly precise bearings that are used in things like submarine props, aircraft carriers & F-18s. They may not be the only US manufacturer of ball bearings, but they are the only ones that are certified to make these military grade & sometimes top secret ball bearings. Having customers on both sides of the civilian / military fence is the only way Bearing Co. can keep it's factories running. If it's civilian side loses it's one of it's big auto manufacturer accounts, the company folds. If the company folds & the military can no longer get these highly precision ball bearings for their hardware, (and getting them from overseas is not an option, things like the vibration resistant parts that go into sub props are still top secret) then you have a national security issue.

Given this example, what would you have done in the USA's shoes? Now remember this isn't the only manufacturer in the USA that is in this position, you potentially have dozens if not hundreds of companies in similarly chaotic situations.

Also, keep in mind that the US Government are still the ones buying these parts in the end, so just raising the hardware prices across the board is probably not a viable long-term solution in keeping cost down.

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But the military (government) is nothing more than a customer in that situation. It would be the same if say, one half of the company was providing bearings to the auto industry and the other the aviation industry, they rely on customers...the government can be a big customer in the market driven capitalist system but it dosen't mean it is the system or "so" intertwined they can't be separate.

[Jaysyn]

But the military (government) is nothing more than a customer in that situation. It would be the same if say, one half of the company was providing bearings to the auto industry and the other the aviation industry, they rely on customers...the government can be a big customer in the market driven capitalist system but it dosen't mean it is the system or "so" intertwined they can't be separate.

You answer is a non-solution to the dilemma. If they aren't intertwined, where does the US Military get their specialized parts from?