Are we on the verge of entering the next and most severe phase of the financial crisis? QE looks like it is on its last legs. It was supposed to buy time while borrowings were got under control. In fact, all that has happended is that borrowings (especially of government) has increased. At some point soon things are going to get tough, very tough.

Austerity and absence of Keynesian investment has made it all a lot worse, just as was obvious before the last election.
The hole we are still in is now deeper and has steeper sides.

What would happen if we just drew a line under everything and just wiped all Government debt?

What I don't really understand is how you can have a global financial crisis where the whole world is in debt without just creating money to clear it? If you can't have QE to clear it, how do you ever achieve it as surely all your are doing is moving debt around from one economy to another?

F##* it, leave the debt for our kids to clear up, whats the problem ?

None!
I haven't got any.

Me neither. I'd like interest rates back up to 16 & 17 percent please

For savers that is.

I'm afraid that would be counter-productive as the word is that the only way that things can be sorted is to cut benefits (pensions and care) to pensioners.

Do you mean printed money to directly pay off the debts? Or simply refusing to pay the debt back?
If the latter then future borrowing would be almost impossible as rates would be monumentally high or people would simply refuse to lend to us at all. The value of the pound would fall dramatically. The economy would suffer from a significant fall in demand since 70% of government debt is held by people or institutions within the UK. There would be unemployment and possibly deflation.


The whole world isn't in debt. Just a lot of governments that's all. There are plenty of companies and individuals who hold wealth.

Be alright, there won't be a double dip

As they did in Cyprus.

Well not another one anyway

Within sixity minutes of David Cameron announcing such a plan the US Federal Reserve would go into emergency session - along with representatives of several of the major trans-global investment banks, corporations etc., perhaps EU delegates, too.

Plans would be hatched for a phased, punitive crash of the UK economy.

Obama would be told to make Cameron "see sense".

Secret negotiations would be opened between Washington and - probably - Michael Gove. If the Tory Party is united behind Cameron they will look to co-opt Labour. Either way, the appointed candidate will be primed to begin preparations for civilian unrest (both the Met and the Army will have been contacted through similar back channels), which he is told, must be met with overwhelming force.

If Cameron refuses to budge, a replacement has been agreed upon and the necessary preparations have been made to prevent the population from hindering a Coup de'tat the first sign will be organised, wide-scale capital flight to the tune of billions.

Inflation will sky-rocket and within weeks it'll be like Russia under Yeltsin when a loaf cost the price of a passenger liner.

A vote of no-confidence would force Cameron and possibly the Tories out with Labour quickly ushered in.

Any hopes we might have will quickly be dashed when we realise the new leadership is actively co-operating with foreign asset strippers. At this point the populace will get rowdy and then discover precisely why our government has been investing heavily in urban counter-insurgency, surveillance, etc. for the past decade.

A bleak forecast from thereon. Although not as bleak as the scenario in which both the Tories and Labour refuse to play ball and the country is divvied up among neo-fascist groups - as happened in Yugoslavia...

Quite.
The notion that the UK is not in recession is misleading.
Parts of London are not in recession but most of the rest of the country is.

There will probably be continued low interest rates and maybe another round or two of QE under the next governor Mark Carney.

I don't see us entering 'the most severe phase' of the crisis. More likely we will carry on bumping around at flat growth.

In the right wing papers that Dally reads, they will of course continue to froth at the mouth about low interest rates, out of concern for poor pensioners of course, and predict that QE etc is about to launch us in to inflation armageddon. Along with some other favourite lines like 'the European welfare state is history'.

Then when their doom predictions don't materialise they will revisit the other one of Dally's favourites: will there be race war in Europe?

Indeed, there should be some register of predictors that we can re-visit on, say, a five yearly basis just to see who got it right and who was speaking out of their backside or simply writing stuff for the purpose of feeding the rabble with a story.

[urlhttp://www.telegraph.co.uk/news/election-2010/7165000/conservative-manifesto.html[/url

[url=http://www.taxresearch.org.uk/Blog/2013/06/25/jp-morgan-wants-europe-to-be-rid-of-social-rights-democracy-employee-rights-and-the-right-to-protest/JP Morgan's vision of the future[/url

[url=http://www.guardian.co.uk/commentisfree/2013/jun/24/how-trust-state-spies-citizensAnd we're delivering it to them on a plate[/url

Unelected and unaccountable – they'd probably relish fascism.

This week's File on 4 is well worth a listen. It's about the manipulation of oil markets and how this adversely affects pump prices. I was astounded to hear that at any time "physical oil trading" is dwarfed x8 by "paper oil trading" (derivatives). It is the paper trading that is causing concerns on market rigging.

True to form, the OFT "investigated" and in January concluded that they could find nothing untoward, stating that if they were required to investigate further, they would require more evidence of wrongdoing.

Now I may be accused of naivety but I thought investigations were supposed to find evidence of wrongdoing, not the other way round.

Buying and selling stuff that you don't actually have in your possession, nor ever will, nor ever will even have knowledge of where in the world it is located.

Can you imagine eBay working like that ?

If I put 10% deposit on a new car, got the log book, flogged it to someone else and simply walked away from the deal, I'd be in bother. At least I'd have paid the dealership 10%, these fookers pay nobody anything (apart from themselves)

That's not how derivatives work though, it's not the commodity itself that is being sold, it is the option or obligation (depending on type) to buy the commodity at a certain price at a certain time. It started out as a way in which people who actually did want to buy or sell that commodity could future proof the price they wanted to buy or sell the commodity at. In the interim the price might move in or against their favour and they would either gain or lose out on the agreement, but that was the inherent gamble, they were hedging against the future price of something they wanted to buy or sell. Now many of the people doing the gambling/hedging have no real interest in the commodity itself, they simply gain or lose based on which way their bet moves versus the commodity price. The main issue is to what extent the gambles themselves can affect the price of the commodity because they express an opinion of how much analysts think they are going to be worth in the future and that feeds back in to price now. In your example you would actually be buying an option or obligation at buying a car at a ceratain price in X months time, and in the meantime the value of the car may go up or down and you gain or lose accordingly. You can only walk away from the deal if that's the type of derivative you've bought in which case you will have lost your stake, or you may actually have to buy the car or pay compensation to someone else who will buy the car at the price you agreed.

I admit it was a poor analogy and I could understand selling futures but there's surely a major problem when the value of future sales is eight times greater than the value of physical sales.

Listen to File on 4 and let us know your opinion