Cameron Solves Debt Crisis

[usedbustickets]

quote:Originally posted by desmartinson
 the only thing i know in my time is every labour government increases income tax even if it is called something else,and i was always better off under the torys.
Watch this space now John

Clear that space
If we're going to have sweeping generalisations then how about every Tory government increased indirect taxation that always hit the working man a lot harder than the rich high earners.

By the way Des which industry/company were you in where your final salary pension was screwed with?

[Ovacikpeedoff]

UBT, Anyone who suggests that the only way to solve a debt problem is to spend, spend, spend is in no position to lecture anyone on what economics is about. You obviously have not read an economic book since Keynes was preaching failed theories. These theories had been practiced in the UK from the 2nd world war to the mid 80s and failed. I think I read many more economics books than you have.

By the way not to confuse you, I am talking about John Maynard Keynes who was an economist and not Milton Keynes in Buckinghamshire.

[Colwyn]

quote:Originally posted by Ovacikpeedoff

I live in the real world ... You will get very little satisfaction from the bank if you go looking for a loan and tell them it is alright as I expect to earn £50k next year. You calculate debt on the ability to be able to pay on your current income... Your proposal of spend against future income

I am really disappointed with this reply OPO. I have enjoyed jousting with you so far because your prvious replies were usually strong enough to require me either to change my mind or to think more carefully about the case I was making.

The notion that banks calculate loans against your current ability to is historically inaccurate. The sub-prime mortgage market, one of the major triggers of the banking collapse, based exactly upon bankers lending money to people that a rational analysis would show would be unable to pay off in the future. But bankers who were being offered millions of dollars of bonuses for this year's performance didn't seem to give a damn about long term prospects, or perhaps thought that by packaging all these sub-primes with other "assets" and selling them on to other financial institutions would somehow make the risks disappear.

As for saying that my proposal to spend againt future spending is wrong - it wasn't "a proposal". It was my view about what happens in the "real world" and not in some dream world where people and governments should live within their means (according to you) but quite clearly do not, in reality, do so.

[Ovacikpeedoff]

Colwyn, I spent 35 years working in the banking industry and I do know how we calculate credit risk. What I find with some of your points is that you cherry pick sections and do not give the whole picture. You say that I make comments like comparing households  to governments simplistic and I say sometimes you give distorted views. For example, Sub prime lending was not a problem when we had low interest rates and employment in the US. It is when interest rates and unemployment started to rise that the problems began.Also there was an asset that secured the loan. The final nail was when the price of property started to fall and debt that was secured had become unsecured.

I am not defending the banks as I still thought it was irresponsible lending and the situation became worse by the packaging of these loans in Special Purpose Vehicles that allowed the sale of these loans to bondholders. This removed the risk from the banks balance sheet and the funds raised from the bonds allowed the whole process to start all over again. It even became more complicated in that these bonds and SPVs were repackaged and sold on. We saw the irresponsiblity in the Northern Rock lending doing 130% LTV mortgages and look what happened to them.

Before I retired I wrote a report about thsese SPVs and I always thought they were close to pyramid selling and the whole thing was built on a house of cards.

I am not against borrowing but it is borrowing that you can afford. Back to my simple example of the household, if you came to us we would calculate your disposable income and decide if you could afford to pay back the loan. We also built the model with a safety factor to cover interest rate rises.

The trouble with government is once you start the handouts it is difficult to take them away. If they do they will lose the next election. What governments tend to do is borrow more and more.So when tax revenue falls then the government even borrows more and hopes to repay it some time in the future. The way I see it is that you should reign back your borrowing to an afforable level. How many times have we heard Chancellors of all parties telling us this is what is going to happen in each of the next 5 years. In most cases those targets are over optimistic and are the wrong basis to set borrowing targets on.

We are not that much apart in what we think.  

[desmartinson]

quote:Originally posted by usedbustickets

quote:Originally posted by desmartinson
 the only thing i know in my time is every labour government increases income tax even if it is called something else,and i was always better off under the torys.
Watch this space now John

Clear that space
If we're going to have sweeping generalisations then how about every Tory government increased indirect taxation that always hit the working man a lot harder than the rich high earners.

By the way Des which industry/company were you in where your final salary pension was screwed with?

Confidential information im afraid Peter. ;)ps, i wasnt a rich high earner. but got hit more by labour.

[usedbustickets]

quote:Originally posted by desmartinson

Confidential information im afraid Peter.[ [/quote]

I've got you sussed now Des you must have been working for the Secret Service.. 00Des:D

[usedbustickets]

quote:Originally posted by Ovacikpeedoff

UBT, Anyone who suggests that the only way to solve a debt problem is to spend, spend, spend is in no position to lecture anyone on what economics is about. You obviously have not read an economic book since Keynes was preaching failed theories. These theories had been practiced in the UK from the 2nd world war to the mid 80s and failed. I think I read many more economics books than you have.

By the way not to confuse you, I am talking about John Maynard Keynes who was an economist and not Milton Keynes in Buckinghamshire.

Oh dear OPO I seem to have touched a raw nerve or two.

Let's begin by asking you not to keep making up things I have said.  Such as solving the debt problem by spend spend spend etc.  I didn't say that nor indeed did I imply it.  You should try to read and understand what I have said.  Instead of inventing what you perceive my views are, to suit the arguments you make. The point I was trying to help you with is that a wide knowledge and understanding of macro economics does not come through in your posts on CBF.

However, seeing some of your posts earlier I now begin to see where some of your confusion lies, and why you struggle with the subject.  You are looking at the situation from a banking perspective.  You should never confuse banking and economics.  They are not the same thing.  I say that after a number of years of working for a bank, where I often saw this mistake being made by 'bankers', when offering their opinions on the economic, particularly the macro economic, situation

As to your claim that you have read more economic literature than me, perhaps you have, I only managed to study the subject as a student at Ruskin College, Oxford, and then as part of my masters degree at the University of Warwick Business School, with a bit of further reading and experience since.

Have a nice day  

[Ovacikpeedoff]

Interesting you did a degree and MBA. I happened to do a distance learning MBA that was sponsored by work through Harvard. I did not think it was necessary to have to boast about it.

So far all you have contributed is criticism and nothing else. If you have something constuctive to say let us hear it.

[Colwyn]

What's all this about Keynes preaching failed theories? Keysianism was concerned with the management of national economies and was a sound economic policy through the long post-war boom until the end of the 1960s. At the time many economists thought that is was because of the economic crisis that followed the "oil shock" as producer counries hiked up the cost of oil. Later, others came to see it as function of far wider and more fundamental economic change. In a globalizing world it became more and more difficult to manage economies within the confines of the nation-state. For some, this meant that Keynesianism had to be abandoned as a failed theory (but a quarter of a century after Keynes' death so he could hardly be accused of preaching failed theory). Others thought that the problem was how to recreate Keynesianism but this time on an international level of supra-nations (such as the EU) or, looking further into the future, world government (with institutions such as the IMF and World Bank). Today we are still struggling to gain an understanding of the global economy and how we can manage it. The prospects for Global Keynesianism look rocky in the foreseeable future at just the time, after banking crisis and in sovereign debt crisis, when a means of international management of economies is a much sought after goal.

[usedbustickets]

quote:Originally posted by Ovacikpeedoff

Interesting you did a degree and MBA. I happened to do a distance learning MBA that was sponsored by work through Harvard. I did not think it was necessary to have to boast about it.

So far all you have contributed is criticism and nothing else. If you have something constuctive to say let us hear it.

OPO I seem to have touched another raw nerve and so my dear chap apologies if you think I was boasting. I was simply responding to your earlier assertions that I had little or no knowledge of economics.  Congratulations on your distance learning MBA - always a tough, but worthwhile, route to learning - but I would observe that occupational modular  based MBA courses are so often academically thin in areas such as economics and rather overblown with occupational learning in such areas as marketing, accountancy and banking.  Which perhaps explains the gaps in the learning as presented by you.

Always happy to be of service and guidance.