10,000,000 * £1,000,000 = £10,000,000,000,000 or about 14 times our current national debt or x7 (700%) of our GNP. This would make the PIIGS debt level look particularly attractive, with Greece at only a piffling 190%, an absolute snip for the international bond markets.
Forget the dream, the reality is that NONE of the Western world politicians have told you the bad news.... All of the Western nations create too little wealth and consume too much (with the exceptions of Norway, Switzerland and possibly Germany) (the difference is funded through Government and personal borrowing). Until everybody grasps and accepts that, then the living beyond our means train crash is going to continue to head at full speed straight at the buffers.....
Don't be fooled by the LibCons austerity measures as the deficit reductions is based on good economic growth as EVERY year they to intend to increase government spending, just not as fast (they hope) as tax revenues increase due to growth.
In the last few years our interest payments have gone from £6bn per year to £32bn this year (blame Labour for this for borrowing at the top of the economic cycle). This is more than the defense budget (hence 20,000 soldiers are to be sacked), this is why such large cuts have to made with increased Government spending. We are in a deadly debt / interest spiral, just a bit slower than the PIIGS. This is one of the reasons why I'm getting out of this country as I can see those big red buffers approaching as the train drivers (useless politicians) wind the throttle forever forward (feel good factor for voters and votes) so the train goes faster....
With globalization the cost of business and our wages are going to have to meet the BRIC nations to be competitive (less the cost of transporting the goods to market costs). Wages are about $5000 (£2125) in China against about $45,000 (£28,000) in the UK. They are going to have to meet in about the middle or $25,000 (£15,000). Now £13,000 wage reduction would be suicidal for any political party, so how will it be achieved? By currency debasement, hence QE, low interest rates and high inflation, as this does the job. There will be big losers (savers) and winners people that have borrowed money (so they can still service their debts and stop a banking crisis and the cutting of the bankers bonuses). But it will mean our currency dropping against the dollar and therefore making commodities much more expensive, this is why we have 5-12% inflation which depite the BOE always telling us it is a blip, it will continue or accelerate, with food and energy always at the 12% end. So realistically all internationally traded commodities will have to at least double in price, so expect all internationally priced and traded goods, especially energy and food costs to at least double in real terms in the next 5 years.
By 2015, when the LibCons aim to eliminate the budget deficit (which of course we know will happen, as we know politicians, always tell the truth and deliver on their promises
) the UK deficit will have grown from the current 62% of GDP to about 100%, which is right on the edge of affordability, with interest payments around £70bn or the equivalent of the NHS budget.
All of this is against a backdrop of an aging population and big pension spending increases which includes the extra 1m
vital services outreach co-ordinators that Labour employed all on their gold-plated pensions at an estimated extra cost of an extra £1000,0000,000,000 over the life of the pensions, and we will all want the very best treatment on the NHS for all of our old age ailments as we have paid NI, (including all those in the black economy: un-registered self-employed, travelers and health tourists (especially from Africa for AIDs treatment)), all of whom have paid NO NI and expect the very best entitlement, £100,000+ treatment costs per patient will do nicely.
At the moment if you are employed your REAL tax rate is between 45 and 70%, employer NI, employee NI, PAYE, VAT, council tax, insurance tax, fuel tax, alcohol tax, tobacco tax, energy tax, flight tax, TV tax, Road Tax etc etc..................................., (an increase in Government spending of 37% in 1997 to 52% in 2010 has to come from somewhere, it was (32% in 1991, but John major started this 1% per year Government spending increase, what do you think the fuel escalator he introduced was for?) (to me, once it is above 50% you are a serf or slave of the state, much like in feudal times, replace Lord of the manor with their castles and lavish life styles to that of the politicians and their white elephants, ditto), and this is only going to get worse, as the welfare budget continues to grow exponentially to keep those who prefer not to work at the lifestyle they aspire to (if it means having 12 kids, by 12 different men as a single parent then this is a good trade off for £500+ benefits per week with no-rent, council tax etc).
I have not even mentioned the long term elephant in the cupboard, which is food security. Many Asian / Middle Eastern countries including China are leasing / buying large areas of Africa and South America for their own food security. As we need to import 50% of our food, what is our Governments food security policy?
Mind you France is a net exporter of food, so I'm sure in a crisis, even if it meant they had to introduce rationing in their country to help us out they would.
This is another reason I'm moving to the Ukraine, as I've got to think of my 15month old daughter. Ukraine is a net exporter of food (especially wheat and it is the world's biggest exporter of sunflower oil) and I'm going to have my own small holding for food security.
Sorry to be so gloomy, but to be foretold is to be for-armed. It is up to all of you to decide on your on strategy.
