The differences between us and the other countries are several.

The BofE is willing to act as a lender of last resort which mean it will buy bonds if there is a liquidity shortfall. The other countries don't have that. They have to get a bail out from the ECB which doesn't just happen and so lenders are less willing to hold the debt of these countries and if they are they charge a premium for it.

It is easier for us to service the debt as the interests payments always have been and still are low. A lot of the debt is long term (more than 10 years) so we don't have to find the cash now whereas these countries are in the exact opposite situation (a lot of Greek debt is for just 3 years or less).

Historically we have had even higher levels of national debt relative to GDP. It was something like three times GDP on the 1950's. We didn't go belly up then and so there is confidence the debt is manageable now.

We have much more flexibility than these countries in that we can do stuff like quantitative easing (print money) and devalue the currency.

Therefore the problem isn't that we are in the same boat as these other countries but that despite the advantages all the above gives us in our ability to deal with the current situation the current government has made a total pigs ear out of it.

Despite loads of quantitative easing, lower currency value and virtually no upward pressure on wages they have managed to choke off any demand that would lead to increased taxes, lower benefit bills etc by cutting so fast and deep. Osborne is basically the worst chancellor we have had since the end of the second world war.

You really think Osborne alone decids such serious policy?

But it seems that many on this thread are still extolling those policies!! After all, it has been said they were great and sustainable until something mysterious happened in "casino" banks (which is, of course, utter tripe) and we should have more borrowing to build more property and thereby grow the economy!

You are falling into the "all borrowing is bad" trap.
That's like letting a burns patient freeze to death.

Your patience in explaining is exemplary, would that I had that kind of forbearance.


Indeed he is.
Worse than the previously very worst.
He's often derided as not-that-bright but I think he is probably very clever, he actually knows full well what he is doing... and that is the truly worrying part of it all, he is waging class war.

He is the chancellor and whether he does or doesn't decide policy alone he carries the can but I'd be more interested to know if you now understand why we aren't like Greece and Spain. So do you?

Absolutely.

The crash/recession proved an absolute gift for them. And with the bulk of the media happy, for equally ideological reasons, to help perpetuate the lies, they've had the opportunity to take a wrecking ball to all that they ideologically hate.

Ni I'm not. But you do have to onsider, inter alia, your starting position when borrowing, your future earning capacity and what you'll borrow for. in the position the UK is in it's difficult to see an obvious way forward by simply borrowing.

I don't know anyone who is suggesting that the 'way forward' is only by borrowing.

But what are they suggesting? It seems to be Labour soundbites from the telly. What are the proposals?

Rather than the BofE printing money in QE and loaning it to banks, who then sit on it instead of lending, if we had issued 99 year bonds at 3% we could have raised the £50bn needed to build one million new homes to rent at truly affordable rates.

As I've stated before, the land is already available and is in public ownership. If that land was rented on a 99 year lease at true peppercorn rents (99p per year), to not-for-profit or charitable housing associations, then we can start to make serious inroads into a lot of this country's problems:

An average house (excluding land) can be built for £50k so the annual interest repayment on each house would be £1500 per year or £125 per month. Double that figure to cover admin and maintenance and we still end up with a rental of £250. Way below current market rates.

We currently shell out around £18bn per year in housing benefits, remember this isn't a benefit for scroungers or shirkers because most housing benefits are paid to those already in work who cannot afford their rents. Housing benefit is a landlord's benefit, nothing more or less. Building houses using the model above would put a serious dent in that housing benefit bill.

As you know I agree with "council house" building and was saying it back in 2008. But, there is the big issue that a major incrase in housing supply could force prices down in absolute terms, which could destabilise our already destabilised financial sector. I think that's why the government are looking at other so called "infrastructure " projects to wate money on.

With what's currently happening to those who have maturing interest-only mortgages, especially those involved in buy-to-let mortgages, a social housebuilding programme won't make much difference.

You say that like it's a bad thing.

The house price bubble needs to burst, we can't carry on with double digit (in %age terms) house price rises and zero wage increases. House prices have a massive knock on effect with pressure to raise wages & benefits being the main one.

No. I just tried to point out the governments dilemma. On a personal level, I feel that the ownership of land (and with it property) is wrong in principle. Ideally all housing should have no cost attached to it. We ought to up with another way of supporting our economic system.

What would happen to all the people losing money, being made homeless?

No worse than the "more borrowing is good" trap you are falling into.
That's like ignoring the gross mistakes that got us into this mess in the first place.

No it isn't, it's nothing like that at all.

Borrowing to fund tax shortfalls and pay an increased benefit bill (as we are currently doing), is the really stupid thing to do

Why would they be made homeless?

They would still have a home, just not a home that was worth as much as they thought

That was going to be my next question too, of course it may cause apoplexy in some financial institutions when they realise that a percentage of their loans have been made against assets that aren't worth anything like what they thought they were, but as they themselves say "the value of investments can go down as well as up" and they surely read their own small print didn't they ?

They need a change in the way they view their business, when you've made a 25 year 95% reducing loan against a property that isn't going to be valued at the 95% value for the next ten years but then will gradually come back into the black as the mortgage is paid off and the values creep slowly up, then all is well - at the end of it all they only want security, they don't give a damn about what the property is finally worth.

I'd ask Jerry and Cod'ead what they own, but I fear I know the answer.

What the hell has that got to do with anything?

You don't have children but that doesn't stop you pontificating on those who do

You too are falling into the trap of thinking that because it was heat that got him into that mess, the burns patient should be allowed to freeze to death.

Borrowing is not the total evil that Osborne would like us to think.
Without borrowing, infrastructure, for example, simply wouldn't exist.

Brown and Darling's borrowings were well within tolerable limits until the financial crash.
Indeed, both debt and deficit were better than they had inherited from Osbornes' party ... but, as we are supposed to think, Conservatives borrowing is absolutely fine but Labour's smaller borrowing is all totally bad.

You mention gross mistakes... the gross mistakes that got us into this mess were largely those of banks and financial institutions gambling with other people's money and trading in worse-than-worthless derivatives.

The affordability of debt is usually measured as a percentage of GDP.
Osborne has overseen (not overlooked, he's quite sanguine about it) a decrease in GDP ... and an increase in debt-to-GDP ... which means that debt-to-GDP has gone from 52% to 93%.

Put simply, even balanced against the low gilt yields he has to pay, he has made the affordability of the UK debt an awful lot less affordable than it was in 2008.
There now only a fruitcake rump of economists who support his policies, even many who wrote to the papers in support of his plan in the early days have now either U-turned or say it should be slowed.

Osborne warned that the UK was in danger of losing its triple A rating, which would be "disastrous" and his measures would prevent that from happening.
Three years on, the UK has lost those triple A ratings and the IMF (yes, even the IMF !!) is saying ease off the austerity please George.

No wonder he was sniffling at Thatcher's funeral, he is Thatcherite through and through, and is continuing her political ambition of the destruction of the welfare state and marketisation of everything.

I have a house with a mortgage on it that both I and the Nationwide are both happy to support, if house prices devalued by 10 or even 20% overnight then both I and the Nationwide would still be happy with our equity and as a side issue my daughter who is trying to buy her first house would also be happy although I suspect that the short sighted lenders would be completely paranoid about lending at that point.

The value of my house is totally irrelevant to me, the date at which my mortgage is paid off is totally irrelevant to me, at some point in the future it will be paid off and at some point in the future I will cark it and my daughters will inherit what I have left in equity, in the meantime I live here and enjoy its use.

There is really nothing more to it than that.

The loss by and large would be on paper, the value of your investment yada yada yada...

How would house prices dropping make people homeless?