Financial fuckery thread

[Cain]

1.02 million 16-24 year olds out of work.  Unemployment at 2.62 million.

That's 8.3% unemployment.  20.4% unemployment for the 16-24 year old bracket.  We're still beating the EU average, but given Spain is, for example, at 45%, and Greece 43% for youth unemployment, that is hardly a reassuring thing.

[Scribbly]

The number jumps by another 300,000 if you go up to 25, and almost by another percentage point to 21.3% out of work...

It kind of disgusts me that the government response to this is to foist it onto the Eurozone crisis as well, rather than take ownership of the problem; which is largely that employers have a very large pool of very experienced, older individuals to recruit from and they have been filling entry level apprenticeships with them rather than the younger generation, because they don't want to take the risk.

Part of this is bad because it means apprenticeships aren't meeting their goal. Part of it is bad because of the amount of people who are 26+ who are so desperate for work they'll take an apprenticeship over anything else. All of it is the government's fault, with the Eurozone crisis very much being a secondary cause, IMO.

[LMNO]

I know the phrase, "how did this happen" is a small question with enromously complex answers, but... damn.

Was the Wall Street crash the straw that broke it, or was it just another symptom of an unsustainable system?

[Cain]

Well, the subsequent lack of lending post 2008 has really crippled businesses, as has the lack of demand and consumer confidence.

Also, it turns out the German government knows more about Irish economic policy than the Irish public or government

http://www.irishtimes.com/newspaper/frontpage/2011/1118/1224307767242.html

THE GOVERNMENT has complained to the European Commission over the release in Germany of a document disclosing confidential details about new taxes to be introduced in Ireland over the next two years. In a deeply embarrassing development the document – identifying austerity measures of €3.8 billion in next month's budget and €3.5 billion in budget 2013 – was made public after being shown to the finance committee of the German Bundestag yesterday. ... Germany's federal finance ministry confirmed yesterday that it had forwarded troika documents to the 41 member Bundestag budgetary committee in line with its legal obligation under European Financial Stability Facility guidelines. ... Taoiseach Enda Kenny said last night he had "no idea" how details of the forthcoming budget ended up being discussed in the Bundestag in Germany. "Let me confirm something to you, the Cabinet has made no decision in regard to the budget which is on December 6th," he said, referring to the documents [sic] specific references to the budget.

[Faust]

Funny how that comes out less then 24 hours after Enda "The Waff" Kenny insulted Merkle and the ECB.

[Cain]

Spain just jumped on the austerity bandwagon.  To be fair, what they were doing is obviously not working.  At the same time, how's austerity working out for Greece, Ireland, Italy and the rest?

[Faust]

Spain just jumped on the austerity bandwagon.  To be fair, what they were doing is obviously not working.  At the same time, how's austerity working out for Greece, Ireland, Italy and the rest?

Its working in Ireland but any outside interruption will set us back immediately.

[Cain]

Well, the problem with that is, outside interference in an economy is a given.  Irish FDI accounted for nearly 80% of the entire budget.  Meanwhile, it's been consumer demand at home, rather than trade abroad that is driving the economy.  Given a major part of the Irish plan is "wage constraint", that is going to put a definite limit on any long term growth.

[Faust]

Well, the problem with that is, outside interference in an economy is a given.  Irish FDI accounted for nearly 80% of the entire budget.  Meanwhile, it's been consumer demand at home, rather than trade abroad that is driving the economy.  Given a major part of the Irish plan is "wage constraint", that is going to put a definite limit on any long term growth.

They are upping vat and leaving the rest the same, vat is a form of wage control but the person has more control where the spending goes. We are bringing a lot of money in through education fees paid by foreign nationals as well, We've allowed more indian medical students in this year than ever before.
But still, all it would take is a single default on the likes of greece and we're fucked.

[Cain]

That's definitely smarter than what we're doing, though that would not be hard.  We've essentially made it impossible to be a foreign student here, which is, in addition to signficantly hampering my dating pool, is also massively underming our education system and benefits thereof (students staying here over the summer to work, etc).

It's days like this I find myself yearning for the vaguely competent, authoritarian fist of Chinese hegemony.  Yes, they're bastards, but they're bastards who at least know what they're doing. 

[Cain]

Derivatives trader and author, Satyajit Das:

To understand the US financial position, just remove 8 zeros and pretend it's a household budget:

Annual family income: $21,700

Money the family spent: $38,200

New debt on the credit card: $16,500

Outstanding balance on the credit card: $142,710

The US is trying to bring their budget under control. This year they implemented total budget cuts of $385. Assuming they don't spend more than they raise in taxes, it will take them 370 years to pay back this debt. The bi-partisan US Super Committee is currently discussing proposals to cut spending by $12,000 over 10 years. At $1,200 in saving per year and assuming they balance the budget, it will then take them a mere 119 year to pay back the debt.

That should clarify the position.

[Cain]

http://www.bbc.co.uk/news/business-15820601

According to the consulting firm, by the end of March this year, the aggregate indebtedness of the UK - that's the sum of household debts, company debts, government debts and bank debts - had risen to 492% of GDP, or almost five times the value of everything we produce in a single year.

That compares with 481% at the end of 2008.

So the UK's total indebtedness has increased, and is still the biggest relative to GDP of any of the big economies. That said, Japanese indebtedness is pretty much the same size - at the end of 2010, as opposed to the end of March 2011, Mckinsey says Japan's debts were also 492% of GDP.

US indebtedness is less, at 282% of GDP by the middle of this year, down from 296% in December 2008.

In the case of America, government debt is on a steeply rising trend, jumping from 61% of GDP to 80% over the past two and a half years.

But household debts have fallen from 98% of GDP to 87% of GDP, as homeowners have handed back the keys of their houses to lenders and reneged on the debts (which is possible in much of the US, but almost impossible in the UK).

So what's going on? Why are UK debts still going up?

Well partly it's to do with a phenomenon I've discussed here many times, that debt has been shuffled from the private sector to the public sector.

When banks stopped lending, and private-sector spending and investing collapsed, governments continued to spend, even though tax revenues were falling. So public-sector borrowing exploded.

To be clear, if governments had not continued to spend, our recession might well have become something much worse, a 1930s-style depression.

But it is fair to say that a consequence of banks, households and businesses trying to repay their debts has been a big increase in government borrowing.

Here are the numbers. From the end of 2008 to the spring of this year - so during the course of a bit more than two years - the debt of British companies fell from 122% of GDP to 109%, and the debt of households fell rather less, from 102% of GDP to 97% of GDP.

Most would say those are positive trends, although the pace of debt repayment by households is pretty sluggish and our personal debts (at close to 100% of GDP) remain substantial (and a worrying burden) by historical standards.

By contrast, government debt has risen from 52% of GDP, which at the time was pretty low by international standards, to 76% of GDP, which is more or less standard for the rich west.

But as you'll know, UK government debt remains on a fairly sharply rising path (the government's deficit is some distance from being closed).

One other slightly surprising and - perhaps - disturbing trend is that the debt of financial institutions has risen, from 205% of GDP to 210% of GDP.

[LMNO]

Fucking hell.  How soon until total collapse?

[The Good Reverend Roger]

Fucking hell.  How soon until total collapse?

You should be so fucking lucky.  This isn't a traumatic amputation, it's gangrene.

[Cain]

http://www.bbc.co.uk/news/world-us-canada-15830176

A US congressional committee tasked with reducing the deficit by $1.2tn (£762bn) has failed to come to an agreement.

The panel of six Republicans and six Democrats confirmed after the New York Stock Exchange had closed that its work had ended without a deal.

The outcome means automatic cuts outlined in the bill that created the committee should take effect from 2013.

The US national debt has just risen above $15tn.

The panel was set up in August, the result of a last-minute deal between the two sides in Congress to raise the debt ceiling and avert a default on US debt payments.

President Obama said he would veto any attempt to reverse the automatic cuts to government spending.

They are to be applied over the next 10 years, split between defence and domestic budgets. A few programmes are to be protected, including Social Security and Medicaid.

Republicans said Democrats had never been serious about making cuts to entitlement programmes for the elderly and the poor.

Senator Pat Toomey said: "Unfortunately, our Democratic colleagues refused to agree to any meaningful deficit reduction without $1 trillion in job-crushing tax increases."

But Democrats said the Republicans were solely to blame for the failure - because they ruled out tax rises for the wealthiest Americans.

Senate Majority Leader Harry Reid said Republicans had "never found the courage to ignore the tea party extremists" and "never came close to meeting us half way".

US voters are already deeply disillusioned with Washington.

The BBC's Steve Kingstone in Washington says the political finger-pointing is likely to continue through to next November's congressional and presidential elections.

Congressional approval ratings in recent polls have been at historic lows.

As the reductions triggered by Monday's announcement are not set to take effect until January 2013, lawmakers have the time to change or repeal the automatic cuts.

Republican senators John McCain of Arizona and Lindsey Graham of South Carolina are already working on legislation that would undo the automatic defence reduction, replacing it with cuts across the federal government.

So that'll be fun.