Comments on: To Spend is to Tax http://timworstall.com/2007/10/07/to-spend-is-to-tax/ It is all obvious or trivial except... Sat, 11 Feb 2012 18:45:24 +0000 hourly 1 http://wordpress.org/?v=3.2.1 By: Matthew http://timworstall.com/2007/10/07/to-spend-is-to-tax/comment-page-1/#comment-616 Matthew Mon, 08 Oct 2007 08:25:27 +0000 http://timworstall.com/2007/10/07/to-spend-is-to-tax/#comment-616 But it's hard to believe that you can see there are important unfunded liabilities but that it has escaped the attention of those who lend their money to the government, isn' t it? Tim adds: Clearly, as something of a believer in the efficiency of markets, I don't think that I have seen something that the markets haven't. Indeed, I think I've argued that they should be brought onto the books as it will make no difference to the markets: they already know they're there. The reason they're not on the books is political, not market based. I'm much less of a believer in the economic wisdom of the Great Unwashed than I am of the actual financial markets. But it’s hard to believe that you can see there are important unfunded liabilities but that it has escaped the attention of those who lend their money to the government, isn’ t it?

Tim adds: Clearly, as something of a believer in the efficiency of markets, I don’t think that I have seen something that the markets haven’t. Indeed, I think I’ve argued that they should be brought onto the books as it will make no difference to the markets: they already know they’re there.

The reason they’re not on the books is political, not market based. I’m much less of a believer in the economic wisdom of the Great Unwashed than I am of the actual financial markets.

]]> By: Matthew http://timworstall.com/2007/10/07/to-spend-is-to-tax/comment-page-1/#comment-611 Matthew Mon, 08 Oct 2007 07:40:30 +0000 http://timworstall.com/2007/10/07/to-spend-is-to-tax/#comment-611 Is the country's debt to GDP or debt to asset ratio particularly high - either private or public? I'm a bit sceptical. The interest rate on the 30yr HM Treasury bond is very slightly lower than that on the German government bonds, and quite a bit lower than on the equivalent Treasury. You might say that this just shows that all governments are in it together, but the rate - 4.57% - is only 2.57% ahead of expected inflation (and given I think at least one of you doesn't believe the inflation statistics it's less than that). This suggests, strongly, that the City is not as concerned about the latter as is the Daily Telegraph. On private debt, they were all market-based transactions and again I'd take indivuals' view of their own prospects ahead of the Daily Telegraphs. Tim adds: The Govt debt to GDP ratio isn't all that high on an historical basis, no. Not compared with post WWI or WWII, at least. But you will recall that we had certain problems in paying those off. Also, I'm far more worried about what isn't on the books: unfunded pensions sommittments fo example. Including those (as we should) and the ratio looks a lot less relaxed. On the private debt side, I've argued before that the amount of unsecured debt that people have is evidence of a well functioning legal system: people are happy to lend because they can be sure of getting it back. I've not said directly that I think such debt to be necessarily a good thing, rather, that it's evidence of a good thing, a decent legal structure in which lending takes place. Is the country’s debt to GDP or debt to asset ratio particularly high – either private or public?

I’m a bit sceptical. The interest rate on the 30yr HM Treasury bond is very slightly lower than that on the German government bonds, and quite a bit lower than on the equivalent Treasury. You might say that this just shows that all governments are in it together, but the rate – 4.57% – is only 2.57% ahead of expected inflation (and given I think at least one of you doesn’t believe the inflation statistics it’s less than that). This suggests, strongly, that the City is not as concerned about the latter as is the Daily Telegraph.

On private debt, they were all market-based transactions and again I’d take indivuals’ view of their own prospects ahead of the Daily Telegraphs.

Tim adds: The Govt debt to GDP ratio isn’t all that high on an historical basis, no. Not compared with post WWI or WWII, at least. But you will recall that we had certain problems in paying those off. Also, I’m far more worried about what isn’t on the books: unfunded pensions sommittments fo example. Including those (as we should) and the ratio looks a lot less relaxed.

On the private debt side, I’ve argued before that the amount of unsecured debt that people have is evidence of a well functioning legal system: people are happy to lend because they can be sure of getting it back. I’ve not said directly that I think such debt to be necessarily a good thing, rather, that it’s evidence of a good thing, a decent legal structure in which lending takes place.

]]> By: Letters From A Tory http://timworstall.com/2007/10/07/to-spend-is-to-tax/comment-page-1/#comment-610 Letters From A Tory Mon, 08 Oct 2007 07:22:15 +0000 http://timworstall.com/2007/10/07/to-spend-is-to-tax/#comment-610 If the Conservatives get into power before this mess is sorted out, they are going to have to make some serious cutbacks somewhere. How on earth does Brown get away with this? If the Conservatives get into power before this mess is sorted out, they are going to have to make some serious cutbacks somewhere. How on earth does Brown get away with this?

]]> By: Mark Wadsworth http://timworstall.com/2007/10/07/to-spend-is-to-tax/comment-page-1/#comment-608 Mark Wadsworth Mon, 08 Oct 2007 06:55:46 +0000 http://timworstall.com/2007/10/07/to-spend-is-to-tax/#comment-608 Sam, you are dead right, that is the least unlikely strategy. Sam, you are dead right, that is the least unlikely strategy.

]]> By: Sam http://timworstall.com/2007/10/07/to-spend-is-to-tax/comment-page-1/#comment-607 Sam Sun, 07 Oct 2007 22:26:05 +0000 http://timworstall.com/2007/10/07/to-spend-is-to-tax/#comment-607 <b>Future taxes have gone up by vastly more than current ones have.</b> Maybe it's all a cunning plan - sink the country into debt, arrange to lose an election at the right time, then point and laugh at the Tories. Future taxes have gone up by vastly more than current ones have.

Maybe it’s all a cunning plan – sink the country into debt, arrange to lose an election at the right time, then point and laugh at the Tories.

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