I dip into the Zero Hedge blog on all things financial when I’ve a moment or two to spare.
Appearing on the blog recently is a link to the home of insightful infographics at Demonocracy. The lovely image of French Debt is a small part of an infographic showing truckloads of $100 bills equating to sovereign debt.
There’s an equally good infographic on the exposure of banks to Portugal, Ireland, Italy, Greece and Spain [PIIGS], which shows the truckloads of cash that are needed to rescue the insolvent PIIGS.
Looking at these charts, I sought out other sources on the state of national indebtedness. Here are a couple.
The Economist’s interactive overview of comparative debt as a % of GDP [Gross Domestic Product] provides another view of debt by country.
The UK’s position isn’t good. Tullett Prebon’s July 2011 paper ‘thinking the unthinkable’ , provokes some serious concerns about the UK’s position.
I know it’s all scary stuff, especially when the UK’s National Debt now tops a £1trillion. I’m not a pessimist or a believer in financial armageddon, as there are some causes for optimism, as my next blog post will show.
This report by McKinsey Global Institute on Debt and deleveraging: Uneven progress on path to growth, shows how the UK has work to do to reduce debt. This graph for the report shows just how much more work we have to do.
Perhaps a bit heavy for a gloriously sunny Friday, but here’s an interesting index – Index of Economic Freedom – about our national performance on economic freedom, relative to other nations.
Looks like we’re moving in the wrong direction, which the Index sees as mostly resulting from high taxes and excessive government spending.
Fascinating to see even though the UK is 16th that Germany are 23rd, and France a lowly 64th.
Is this the graph in Citywire that gives the reason for our likely economic denouement.
The grpaph is taken from McKinsey’s August 2011 report – Mapping Global Markets. I’ll need to read this report carefully, as it’s got some horrific graphs to pour over.
Crikey, lots of catching up to do from yesterday. Meetings all morning, chasing up on a couple of initiatives around lunch, then just a pile of stuff.
Meanwhile it looks as though the markets maybe be calling time on countries with big sovereign debt issues. I thought it was merely the PIGS, Portugal, Ireland, Greece and Spain. I can’t see how we can escape critical scrutiny, especially as THIS GRAPH shows. While the UK seems boringly riveted to the MP’s expenses scandal there’s growing and dangerous turmoil in the financial markets. Here’s a selection:
This will become much, much bigger than MP’s.
Foremost to note is that the IFS [Institute for Fiscal Studies] use internationally reputable financial tools to model the UK economy, which means that their findings cannot easily be dismissed. I can’t say I’ve read every word of their Green Budget 2010, but I think I’ve picked up the gist of the eleven chapters. So, for what its worth here’s my summary, by chapter:
- Chapter 1: The UK’s productive capacity: surveying the damage – in reviewing the productive potential of the economy, the conclusion is that a severe financial crisis affects the long-term growth rate of the economy. They judge the government’s estimates to be optimistic, and judge recovery will be slow for longer than government predictions.
- Chapter 2: Fiscal tightening: why and how – government plans are to halve the budget in four years through two-thirds spending cuts and one-third tax increases, pushing the rest to 2017-18. Conservative plans to bring this forward to 2015-16 would need deeper spending cuts.
- Chapter 3: Fiscal stimulus and the consumer – they are supportive of the VAT cut and the car scrappage scheme, being I judge, more supportive of targeted schemes, such as car scrappage. They see an ongoing need for such schemes.
- Chapter 4: The economic outlook – their words here are, ” … the prospects for a strong recovery look rather poor. … continuing to underperform most other advanced countries.”
- Chapter 5: The public finances and sterling – they reckon that the markets are right to be cautious about the soundness of our money and UK finances, requiring to see concerted action on debt and no slippage on inflation targeting.
- Chapter 6: Green Budget public finance forecasts – they view the priorities as the need to repair the public finances and the resilience of the recovery. I terms of action on debt reduction, more needs to be done and tighter target reductions set for the years ahead, although not in 2010-11.
- Chapter 7: Options for fiscal tightening – loads of ’em, I leave it to you to digest.
- Chapter 8: Public services: deep cuts coming – with debt interest and social security spending set to continue to rise, there are no easy choices. Protecting some areas from cuts means more painful cuts elsewhere.
- Chapter 9: Public sector pay and pensions – interesting conclusions that there are regional pay inconsistencies and that some sectors do better than others, so best to work on efficiencies and not pay freezes.
- Chapter 10: Support for research and innovation – they’re concerned about cuts in the science budget and worry about something called the patent box, sorry I’ve glazed over on this one.
- Chapter 11: Reforming UK fiscal institutions – dismissive of Labour’s plans, supportive of Conservative plans.
There, done and dusted. Tea and chocolate biscuits await.
Truly a moment to remember and savour. Conservative MEP, Daniel Hannan, tells Gordon Brown some uncomfortable home truths, after his address to the European Parliament.
If you’re feeling low and despondent. I recommend you play this video over and over, and also commit some of what Daniel says to memory.
The text of his speech is HERE.