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Ask HN: What Is Happening in the UK?

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Re: Ask HN: What Is Happening in the UK?

#121

Post by ceejayoz »

roenxi wrote: post #118
ceejayoz wrote: post #105

Earlier quoted context omitted.

The creditors all get paid. The US has always made its debt payments. New loans get taken out while that happens. Non-$0 debt load, but no defaults. The only time the US ever paid off “all its debt” was during 1835-1836. One year out of more than 200.

It doesn't matter what happened to creditors centuries ago. As it stands right now it is inconceivable that the US could or will pay off all its present and future creditors in real terms. Someone has lost a lot of money (presumably China and Japan). How could the US pay them back without resorting to fantasy? The debts are too high and the US economy is not big enough for any strategy to be politically feasible. Eve…

The debt-to-GDP ratio the US currently carries has been seen before. The raw number is high, but so is the GDP.

$1M in credit card debt would sink me. For Jeff Bezos, it doesn’t even rise to his personal attention.

> Someone has lost a lot of money (presumably China and Japan). How could the US pay them back without resorting to fantasy?

I can’t pay my mortgage in full right now. That doesn’t mean my bank loses money on the loan.

China and Japan are getting paid on their loans, at the agreed upon amounts. They will continue to be paid.

Re: Ask HN: What Is Happening in the UK?

#122

Post by caoilte »

icare_1er wrote: post #72
smt88 wrote: post #25

Earlier quoted context omitted.

You're starting with an assumption that right-wing governments are good for economies. Let's ignore that dubious assumption and instead look at the actual policy. Truss's administration is giving tax cuts to the wealthy and paying for it by borrowing. The markets know that trickle-down economics is nonsense and these tax cuts won't boost UK's economy enough to cover the enormous amount of debt required to pay for the…

"Good for economies" does not mean much, and that's what distinguishes the left and the right. Usually, the right-wing, and the "markets", agree on what is good for the economy. It is quite unique to see the "markets" disagree so strongly with "the right". And it is also worth noting that it is quite rare to see left people use the view of Wall Street as an argument ! I remember many cases in Europe where socialists…

That sort of fantastical thinking is quite rare outside of fringe parties (left and right). The UK Labour party's spending plans in 2019 were fully costed exactly in order not to spook the markets. (Naturally that's not how the media portrayed the situation of course.)

Ignoring the markets hasn't been possible since Nixon ended the gold peg.

Re: Ask HN: What Is Happening in the UK?

#123

Post by truckerbill »

tomxor wrote: post #36
thewarrior wrote: post #16

The UK imports large amounts of energy and other things essential to its prosperity. The UK has a current account deficit which means it does not have enough of the dollar to cover for its imports. It has solved this problem over the years by borrowing and becoming a haven for investment to cover up the shortfall. Now we have a bat shit government that says we need to lower taxes and borrow a boat load of money to ti…

> One way to stop this is to raise interest rates and pull pounds out of circulation but the government is terrified of popping the real estate bubble. I'm pretty sure i'm being naive here but... why? House ownership has become a huge problem for recent generations in the UK, I still haven't engaged with the market because it's so hard to get a foot in the door unless you have masses of disposable income. Popping the…

All the housing stock will be snapped up by Blackstone and the like...

Re: Ask HN: What Is Happening in the UK?

#124

Post by bvoq »

What’s really happening: Liz announced to remove the 45% tax bracket for people who earn more than 150K£ a year. This means that roughly 50 billion £ will be missing from the government. That money will have to be printed, decreasing the value of the pound. More pounds -> Less value.

Re: Ask HN: What Is Happening in the UK?

#125

Post by tut-urut-utut »

Brakenshire wrote: post #106
pyb wrote: post #84

Earlier quoted context omitted.

I think the reason Rishi didn't sway Conservative party members is mostly 1., But you're not supposed to say it out loud. Truss was very much a nonentity until last month

The most popular candidate with the party members was Kemi Badenoch, a black woman, so it doesn’t seem credible that people voted against Rishi Sunak mostly because of race.

Well, supposedly the most popular was a black woman, the most competent was an Asian man, and who gets the post in the end? The most incompetent of them all, whose only advantage is being white.

If that is not racism, I don't know what it is.

Re: Ask HN: What Is Happening in the UK?

#126

Post by caoilte »

imdsm wrote: post #92
fnimick wrote: post #18

Earlier quoted context omitted.

How can you possibly justify keeping even more of your money that you earn from profiting from the work of others, when people in need are freezing and starving? I know HN runs libertarian but this is just abhorrent.

Many people make this point, but very few are willing to defend their views with some good old pragmatism. In the nature of HN, let's have a go at that, shall we? 1. Who works harder, an office worker working for 7.5 hours or a nurse who works for 12+ hours? 2. Who works harder, a person who works 37.5 hours in an office, or someone who works 80 hours a week, founding a company? 3. Who has worked harder to get where…

> Who takes more risks, a person who works 37.5 hours in an office or a founder who puts their own capital in to try and create a company?

Inherited capital in every startup I've worked at. And enough of it that they got several runs at success. It wasn't risky at all.

> Which brings more value to a community, a person who is employed, or a person who employs people?

Too vague a generalisation to have any value. What matters is who does the work and the social value of that work.

Re: Ask HN: What Is Happening in the UK?

#127

Post by chimprich »

cbeach wrote: post #33
steve_gh wrote: post #20

Earlier quoted context omitted.

Quite frankly, you are hugely privileged to be earning at that level. The median average salary in the UK is just under £26k. Also, when you are that income level, there are a number of tax benefits you can enjoy - for example the first £40k you put into your pension is before tax - so it effectively reduces your salary (for tax purposes) by £40k. SO if you are doing the sensible thing and putting money into a pensio…

Yes I do pay plenty into my pension. It's not my "privilege" to earn at that level. I was born into an average economic background. I worked really hard at school and university, and then over a period of seventeen years, I worked really hard in responsible jobs. If all people from average backgrounds took the attitude that only "privileged" people get good careers, then unfortunately it would be a self-fulfilling pr…

> Yes I do pay plenty into my pension.

Then it's not really a 60% marginal tax rate, is it?

> I worked really hard at school and university, and then over a period of seventeen years, I worked really hard in responsible jobs.

Educated by the state, health taken care of by the state, protected by police and emergency services, defended by the military, enjoying the benefits of scientific research, and lots of other things all paid for through taxes.

You did rather luck out having the combination of interest and talent that turned out to pay very well (as did I).

My wife is a nurse and works really hard, literally saving people from cancer, but she gets paid comparatively little because we don't pay enough tax to fund the NHS properly.

Re: Ask HN: What Is Happening in the UK?

#128

Post by roenxi »

ceejayoz wrote: post #121
roenxi wrote: post #118

Earlier quoted context omitted.

It doesn't matter what happened to creditors centuries ago. As it stands right now it is inconceivable that the US could or will pay off all its present and future creditors in real terms. Someone has lost a lot of money (presumably China and Japan). How could the US pay them back without resorting to fantasy? The debts are too high and the US economy is not big enough for any strategy to be politically feasible. Eve…

The debt-to-GDP ratio the US currently carries has been seen before. The raw number is high, but so is the GDP. $1M in credit card debt would sink me. For Jeff Bezos, it doesn’t even rise to his personal attention. > Someone has lost a lot of money (presumably China and Japan). How could the US pay them back without resorting to fantasy? I can’t pay my mortgage in full right now. That doesn’t mean my bank loses money…

> The debt-to-GDP ratio the US currently carries has been seen before.

In the middle of a world war, facing a level of emergency that left civilisations of more than one continent shattered and reordered the world as it was known. As an emergency spike that lasted for around 5 years before they started paying people back. And although the debt was staggering and the US economy was in its prime as a global manufacturing superpower.

This is obviously different, the US government has just been spending because they can. If they even try to pay this debt off it'd be stupid. From the US perspective, why even bother? They're basically already committed.

> I can’t pay my mortgage in full right now. That doesn’t mean my bank loses money on the loan.

In that case you've defaulted on your mortgage. You may get on well with the US government.

And the bank may or may not be losing money for all I care, but on net the creditors to the US are clearly losing money. The numbers are too big for any other outcome.

Re: Ask HN: What Is Happening in the UK?

#129

Post by kypro »

kypro wrote: post #120

If a government runs a fiscal deficit then to balance their books they need to borrow additional funds from the market. If your fiscal plan doesn't make sense market lenders may not be willing to lend to you or will at least expect a higher interest rate to compensate for their risks. The Conservative party in the UK has just elected a new PM who has announced a fiscal plan which doesn't add up - tax cuts financed wi…

Also I suppose to add a little more depth to this explanation a lot of this is related to actions coming from the US central bank.

As the Fed raises rates in the US it makes the dollar a more attractive place to put money. This devalues other currencies against the dollar.

Because the dollar is the reserve currency a lot of stuff countries like the UK imports is denominated in dollars (oil, food, etc). This means the US actually increases inflation pressures for other countries when they raise their domestic interest rates.

This forces other central banks to raise interest rates in line with the US simply to protect their currencies from the inflationary effects of currency devaluation.

Unfortunately right now Europe can't really afford to do this with an ongoing energy crisis, but we have no choice. The US is literally whacking their allies around the head with the US dollar.

But then from the US perspective what choice do they have? The Fed already has little credibility and to allow inflation to run hot in the US to protect Europe from currency devaluation would be equally risky and unpopular.

We're in very tricky times. We've kicked the can down the road for so long that it's now catching up. We no longer have any good options left. It's all just trade-offs from here.

Many including myself did try to warn this was always the risk of such a reckless response to Covid, but I suppose it's too late for that now.

Re: Ask HN: What Is Happening in the UK?

#130

Post by kalleboo »

cbeach wrote: post #23
fnimick wrote: post #17

Earlier quoted context omitted.

> the wealthiest 1% are paying 28% of income tax receipts - and this percentage has increased over the last decade Without any information on how wealth inequality has increased, and the 1% have more income and assets now than they did last decade, this is misleading at best. If the top 1% are paying more taxes but are also making more money, this hardly seems unfair.

So you think 1% of people shouldering 28% of the cost of public services is fair?

I don't think it's fair that 1% are hoarding 20% of wealth
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