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[Rods2]

With the last quarter of 2012 registering 0.3% fall in output. Are we on the way to a triple dip recession?

Today I read the most thoughtful and considered economic report on our current recession, why we are where we are and where we are going into the future. The global key is EROEI. So here is the link for all those that want to be enlightened:

http://www.tullettprebon.com/Documents/strategyinsights/TPSI_009_Perfect_Storm_009.pdf

[TheBoy]

TBH, the figures that suggested we pulled out are probably inaccurate.  Anyone collating figures on the High Street can see its flat.

And that, I think is the problem, because its flat, and likely to be for at least another 2 years, we will see us pull in and out of recession a few more times before any real growth happens.

[albitz]

Imo we need tax cuts to stimulate growth.The alternative being proposed by the lefties,is to borrow lots of money to create artificial jobs.That cant work in the long term.It will just stack up even more trouble for the future.
Currently we are just bumping along the bottom hoping something will happen soon.

[Rods2]

We need to rebalance the economy. McRuin boasted that he was going to double public spending which he did, but unfortunately it was on the basis of borrowed money for every £1 increase in GDP (fiddled anyway by switching inflation from RPI to CPI) he borrowed £5.40.

In 2000 Government spending was £250bn in 2013-14 it will be £744bn and GDP has not increased by x3. Hence Government spending has gone from 36% of GDP to 49%. Until the 49% starts heading towards 36% or lower then there will be no growth.

Our only hope is to drastically cut public spending an across the board 20% wage cut to bring the public services back inline with private industry would be a good start followed by corresponding tax cuts. It will never happen the Government would rather take the easier political route of have no growth and 20% inflation over the next few years to do that but this route will do much damage to industry so we continue to have no growth, just stagflation. It will also do nothing to reduce the deficit.

This situation is all going to end in tears with hyperinflation, a default or both. I wish I could see an alternative, but I really can't. 

[Varche]

I agree with you. It is a king has got no clothes on situation with short termists in power. No PM/party wanting to get back in again would instigate 20% public sector wage cuts, proper reduction in military spending, back to basics with the NHS and other across the board cuts.

In two years time Milliband and his lot will be in power on the back of a growth package which will just fuel the debt.

The big question is how much debt can a country actually incur before it goes belly up?

[Rods2]

That depends upon interest rates. But once debt to GDP goes above 90% you are very vulnerable to interest rate changes if you are running a deficit and have maturing bonds to raise funds for, to replace. Your future is in the hands of the markets and market sentiment.

The plus for the UK is that our bond maturities are longer than most countries with an average of 13 years, the bad news is that after Ireland we are joint second with Japan as the most most indebted country on Earth with public, private, industry and off balance sheet debts like PFI at about 500% of GDP. Once you add in public sector pension and retirement pensions then it gets really ugly at about 900% of GDP. Quite obviously neither is affordable, which is why they will hyper-inflate them away or default on our obligations / debts.

http://www.moneyweek.com/endofbritain

Greece, Portugal, Spain and Italy have shown how quickly markets will punish a country, once confidence is lost. We have only got away with it so far because we have our own currency and the Eurozone countries we going to be in trouble first. Our time is coming with our AAA rating lost this year and if we have another year of no growth (likely) and missed deficit reduction in next Novembers budget statement, so the balanced budget can is kicked another 12 months down the road (likely), then the wheels are going to quickly start falling off the UK economy, unless the markets are still focused on the Eurozone where things have gone from bad to worse (still very possible).

Countries like large businesses normally take longer than expected to go broke, where there is much maneuvering to stave off the inevitable. Greece, Portugal, Spain and Italy are all examples of this with the jury still out of Ireland.

[cem_devecioglu]

solution not a brainer.. Cameron has to do what Putin has done.. threat the oligarcs/aristocrats and bring all their money back to country..
(if they dont listen, hang them and nationalize their properties)
start production.. stop buying from outside (except critical items) .. leave EU and its ridiculous payments..  re-nationalise Bank of England and nationalize energy sector.. job done..

[cem_devecioglu]

solution not a brainer.. Cameron has to do what Putin has done.. threat the oligarcs/aristocrats and bring all their money back to country..
(if they dont listen, hang them and nationalize their properties)
start production.. stop buying from outside (except critical items) .. leave EU and its ridiculous payments..  re-nationalise Bank of England and nationalize energy sector.. job done..

and if thats not enough I have more effective solutions..   but thats enough as a start

[Marks DTM Calib]

The biggest challenge for me is the wall to wall negativity of the press, I feel things would get better quicker if they didn't permanently bombard us with negativity ......to many bad vibes man

[cem_devecioglu]

The biggest challenge for me is the wall to wall negativity of the press, I feel things would get better quicker if they didn't permanently bombard us with negativity ......to many bad vibes man

Mr DTM.. of course negativity makes things worse.. but western media is writing only the head of the iceberg

[cem_devecioglu]

and if you dont kick the IMF asap even your grandgrandchildren will born in debit..

[Marks DTM Calib]

Cem, all to often I look at the bank statement and think `we could afford a meal out this week`  but I don't because I have been almost brain washed that we can't afford it.

To get out of a recession you need people spending and confidence....

[cem_devecioglu]

Cem, all to often I look at the bank statement and think `we could afford a meal out this week`  but I don't because I have been almost brain washed that we can't afford it.

To get out of a recession you need people spending and confidence....

thats correct.. money must flow through the arteries..  but problem is not the ordinary citizens trying to save few bucks..
 
main problem is all money acculumated in the hands of few and they are keeping it away from the flow..

[cem_devecioglu]

besides, older capitalism was helping production but in the new model no one cares production, instead they prefer easy money from high interests without any risk  and tax

[mantahatch]

Is there any country that has no debt ?

What I don't understand is why european countries borrow of each other, for example (approx figures from last time I looked) the UK owes Germany £260 billion, and the Germans owe the UK £200 billion. How does that work then ?