Bond markets - is the shit hitting the fan?

[LawdAMercy]

People who know about these things - AIBU in crapping myself about the future of the UK and the possibility of global financial Armageddon?

Because when government fiscal behaviour is properly constrained by reality, democracy determines policy.

Fundamentally the public say to the government "we want what you propose" through democracy.

But what the politicians propose and what the public wants needs to fit within the bounds of fiscal reality. If it doesn't then it cannot be performed.

What defines fiscal reality ? Things like the tax take, the amount the government can borrow and of course the amount the government spends.

There has (IMO) in recent years an increasing tendency for politicians to propose policy in response to demands from the public that doesn't fit within the bounds of fiscal reality. If governments continue to do this/public continue to demand it then fiscal reality will begin to dictate policy.

Ultimately there is only the public and fiscal reality with actors inbetween. The government is just a representation of the public and the bond markets one representive of fiscal reality.

The operative word is "average".

These ideas would boost growth. The median wage would be £16k higher if growth had continued since 2007 in the manner which it had gone up in the 30 years before that. If growth had continued its trajectory since 2007 the government would have an extra £100bn a year. Add that to the £100bn we currently spend on debt repayments and the extra pay received by employees and this country would be transformed. But no. Lefties hate the idea of the economy booming, don’t understand how vital these ideas are for growth and do the country stagnates.

The quickest, easiest thing to boost the economy that the government could do would be to remove stamp duty on shares. This would raise a fortune. It would go down like a cup of cold sick with the ignorant Labour left so if doesn’t happen and the country gets ever poorer.

The government is of course free to ignore the machinations of the bond markets by the simple expedient of not selling bonds.

The triple lock was introduced by Gordon Broen to ‘catch up’ pensions to a decent rate. It was NEVER meant to be for more than a couple of years. Every politician since has been too spineless to remove it. It’s doing so much more damage every year it’s left. So much damage.

How is it wrong? The comparison is proportion of GDP spent on pensions and pensioner benefits.

The UK government spends about 4.7% of GDP on state pensions, or about 5.1% if you include related benefits like pension credit and winter fuel payments.

Average public spending on old-age and survivor pensions is about 7.7% to 8.1% of GDP across developed economies. In France it's around 12% of GDP, in Italy around 12.8% in Germany around 9.8% and even in the US it's around 6.6%.

And are all recipients of NMW families of four?

It surely wouldn't be as damaging if we could persuade younger people to vote. Currently we have a bit of a catch 22 where younger people don't feel they have a stake in society and so they don't vote, but the reason they don't have the stake is because they don't vote. Obviously they would also need to be persuaded to take an interest in politics which is as boring as hell, or at least it was to me until I got into my 40s /50s

@PAYE ,

‘In terms of evidence of a consensus - please see this report on tax reform prepared by both right-wing and left-wing thinktanks https://cps.org.uk/research/tax-reforms-for-growth/‘

Ummm the Centre for Policy Studies is a Tory lobby group. It’s not academically respectable at all.

The operative word here being "public".

Maybe it's a valid comparison if the systems are alike. But for example, different countries put different emphasis on public and private pensions. So comparison between the two is a bit more difficult than just quoting one set of numbers.

Because - as others have pointed out - the UK government spends a lot of money subsidising workers to save into occupational pensions and when you take that into consideration the money spent on pensions in the UK is bang average in the EU.

Outgoings of a pensioner:

food
utilities.

Outgoings of someone in their 40s:

food (for a family)
utilities
housing (for a family)
childcare
transport
Clothing - a family
Kids clubs

Research shows pensioners are the richest demographic currently. There is no way they need anymore. If they cannot survive on a state pension they should have made better plans for their retirement income shouldn’t they. I don’t know any current worker thinking the state pension will be something they expect to be able to LIVE OFF. They’re making alternative provisions.

And the JRF is a lefty group. It’s a RANGE of bodies of very different political outlooks that all agree that these changes are so fundamental they HAVE to be done.

There are many disabled MNers who say PIP isn't enough, it's a lifeline at least and they need it to survive.

And of course if National Insurance were charged on pensions, it would in fairness have to be charged on all other sources of income, whether private such as income from savings and investments, rental income from property and private pensions, or from the public purse including all other social security benefits apart from state pensions.

They ought to be looking to those who claim it when they could work perfectly well. ADHD? Depression? Cut benefits for these and more PIP to go around for those actually in need.

Yup. Great idea for raising more.

Yeah I’ve said this several times over the last few months, I have a deep concern we are going to get the shit kicked out if us and I keep getting reassured that we can just ignore the bond markets…..

LOL

The report was joint from the Centre for Policy Studies, CenTax, IPPR, the Adam Smith Institute, the New Economics Foundation, Bright Blue, and the Joseph Rowntree Foundation.

The Joseph Rowntree Foundation is left-wing, as is the IPPR.

Maybe we do need the IMF to step in and take the decisions the government are too scared to take?

There's a very frequent MN poster who says she can't and hasn't worked in 20 years due to MH issues. Posters who say they or their DC can't work due to ADHD. I remember when Sunak suggested ending the sick note culture there was a whole MH thread having a fuss about it. A poster with ADHD who says her PIP pays for per to pay someone to do her bills payments for her because if she didn't have this person she'd just waste time on MN

Bond yields are currently returning to historically normal levels, it’s just that after the GFC, borrowing costs were kept low by low interest rates and quantitative easing (central banks buying long dated bonds).

What we are seeing across the G7 high-debt countries is healthy and helps creditors asses credit worthiness.

But hey, it’s all good! Burnham said he won’t “be in hock” to the bond markets. Excellent, we need his policy prowess on £2 bus routes in the middle of nowhere.

Cut welfare, cut spending and get rid of taxes and bullshit hiring red tape that stifles businesses.

We have real people explaining the issue on this thread, using AI just clogs up the thread with long posts.

If you want to police threads then become a moderator.

I strongly recommend the podcast - Andrew Neil Report We're standing on a financial cliff edge. Will the world wake up?
to anyone who wants to listen to a deep dive on this topic

Downloading it now.

Just finished listening to Ed Zitron on the size of the AI bubble, so might as well get all the bad news down in one large dollop of reality-check.