Dickhead’s (mine) musing’s on the economy (not international banking, as that is far too complex for simpletons like me) What does increased government spending achieve? The pot of money HMG has is not enough for the predicted spend, so HMG borrows money to enable the spend to take place. Now this spend (capital?) is a fuel for businesses, but the return is a diminishing one for HMG as spend is diversified over many goods/services. Some are UK based others not. The spend also has a return in corporation tax and personal tax liability, but once again it has diminished from original input figure (a negative return £1 in 2p back maybe?). All very short sighted so far. A particular case – defence spending. As of March 2011 the UK MoD had some 15 outstanding contractual commitments worth approximately £16 billion. This figure represents capital expenditure which the MoD is obliged (contracted) to pay in future years following delivery of products to specification. Some of the largest contracts are amongst the following: [TABLE="class: MsoNormalTable, width: 348"] [TR] [TD="width: 338, bgcolor: transparent"]Typhoon Production and Future Capability [/TD] [TD="bgcolor: transparent"]£17,115 million [/TD] [/TR] [TR] [TD="width: 338, bgcolor: transparent"]A400M Transport Aircraft [/TD] [TD="bgcolor: transparent"]£2,628 million [/TD] [/TR] [TR] [TD="width: 338, bgcolor: transparent"]Lynx Wildcat Helicopter [/TD] [TD="bgcolor: transparent"]£1,901 million [/TD] [/TR] [TR] [TD="width: 338, bgcolor: transparent"]Joint Combat Aircraft [/TD] [TD="bgcolor: transparent"]£2,672 million [/TD] [/TR] [TR] [TD="width: 338, bgcolor: transparent"]Queen Elizabeth Class Aircraft Carriers [/TD] [TD="bgcolor: transparent"]£4,085 million [/TD] [/TR] [TR] [TD="width: 338, bgcolor: transparent"]Meteor Beyond Visual Range Air-to-Air Missile [/TD] [TD="bgcolor: transparent"]£1,240 million [/TD] [/TR] [TR] [TD="width: 338, bgcolor: transparent"]NIMROD MRA4 Development and Production [/TD] [TD="bgcolor: transparent"]£649 million [/TD] [/TR] [TR] [TD="width: 338, bgcolor: transparent"]Type 45 Destroyers [/TD] [TD="bgcolor: transparent"]£5,000 million [/TD] [/TR] [TR] [TD="width: 338, bgcolor: transparent"]Future Strategic Tanker Aircraft [/TD] [TD="bgcolor: transparent"]£12,326 million [/TD] [/TR] [TR] [TD="width: 338, bgcolor: transparent"]Falcon Deployable Communications System [/TD] [TD="bgcolor: transparent"]£354 million [/TD] [/TR] [TR] [TD="width: 338, bgcolor: transparent"]Merlin Helicopter Capability Sustainment Programme [/TD] [TD="bgcolor: transparent"]£837 million [/TD] [/TR] [TR] [TD="width: 338, bgcolor: transparent"]Watchkeeper UAV [/TD] [TD="bgcolor: transparent"]£907 million [/TD] [/TR] [TR] [TD="width: 338, bgcolor: transparent"][/TD] [TD="bgcolor: transparent"][/TD] [/TR] [/TABLE] Now what actual benefit to the economy is this spend? What % of spend is for UK based products? I have no idea, but it will be nowhere near 100%, maybe 35-40%? Therefore increasing the profitability of Non-Uk companies (therefore tax liability - payable to non-Uk government X). Do we really needs all those new systems, seeing as inter-country war is now financially based (China buying Africa, Russia buying Cyprus) Would it not be better to disseminate the previous budgets and confirm who received the monies? THEN just give a lump sump of money to the UK firms (30% of the previous budget say), to distribute amongst the employees for them to spend on UK only products. Capital is distributed amongst the UK economy, but not non-uk economy. Part 1 of a series of inane musings.
Here’s my take on why the UK is heading downwards, fast. The UK has no viable industries apart from a smattering of small engineering and hi-tech electronics companies. Of course there is always BAE; basically an arms manufacturer, but in general the UK has b*gger all manufacturing industry and b*gger all worth exporting. Osborne and his cronies refer to ‘the UK car industry’ being good for jobs. These companies are not the ‘UK car industry’; they just happen to be here because it suits the foreign owners for the time being. The Govt seem to forget that at a snap of someone’s fingers (not in the UK) the employment of numerous workers could cease, simply because the foreign car company owners could decide the UK is no longer viable. The UK is lucky (so far) that it didn’t happen when the triple A rating was downgraded. The rest of the UK is fundamentally a service industry. That means the High Streets are no longer a bustling busy centres of proper retail industry but main streets littered with coffee shops and clubs. Much employment is within call centres. These are effectively a non-industry and comprise of thousands of people on a little over the minimum wage, usually taking calls from irate customers who are in general being treated in an inefficient and don’t give a d*mn manner. The call centres are just another level of un-necessary personnel acting as an answering service. The UK has mainly sold off (or given away) its prime resources of oil, gas, water and electricity to foreign companies. Generally everything that was central and local government controlled is contracted out to where foreign owned companies can control and charge exorbitant prices for various contracts which are executed poorly, inefficiently and to sub-standard quality. This occurs because the level of knowledge and experience of those persons awarding the contracts is far below the standard needed to comprehend what they are actually doing. Crime, Employment / Unemployment figures etc are manipulated so that the real condition is hidden from the population. The police forces are not only demoralised, but inefficient, led by overpaid political masters looking for gongs, large payoffs and pensions, at the same time as expecting to move into high paid private posts when they leave…..Much the same as any top of the tree civil servant (NHS for example). It seems the majority of politicians are liars and thieves using their skills in deception to further their own ends......Who said we weren't a third world country? Sounds remarkably like we are only a little way from having people like Berlesconi running the UK, which taking a smaller step forward a Mugabe could be around the corner. I could go on, but actually I am sick of just writing about it, even though I haven’t touched on half of what I have identified as what is wrong these days…..
So that amounts to more or less £50 billion. Does that mean that £16 bn have to be paid regardless if contracts were cancelled? I am always fascinated by the amounts spent on defence items. I mean, does a tank really cost what people seem to have to pay for one? Or a helicopter? How do you establish the real market value for these things, when the decision is so influenced by political considerations. No one has to dip into their personal bank account for these items, so how do you know you are getting value for money? When did the last armament company go bankrupt, or when did you hear of one operating on wafer-thin margins? I think defence spending is one massive gravy train.
UK used to have numerous shipyards building warships, factories building warplanes, manufacturers of heavy guns, armoured vehicles, etc and nearly all of them went broke. Just a few remain, mainly taken over by BAe. If the MoD wants a supplier to maintain a capability, it has to let the supplier make a profit - if they make a loss, they will simply stop doing it. Actually the UK defence industry, what remains of it, is still one of the world's larger and more profitable arms exporters. It would be very easy to kill it off. Incidentally, I notice the Trident replacement programme is not even included in the list of future commitment. The Defence budget is about £40Billion per year, so it will take a few years to work through the commitments.
You forgot tax avoidance on an industrial scale, and the selling off of british companies to overseas owners.
you should have donated it to the BBC on red nose day. After all, imagine all the great causes which could use such a thing; outreach centres...old foggies homes (council ones, you now where they are treated worse than those in 18th century poor houses)...yoof centre...or you could just give the, money to use in fees and fund the travel of those who do he deeds... and not a big gambler, prefer a bit of Bingo myself Cranker
As a nation, along with many others, I believe we have been living beyond our means for years and particularly this century. We now have to take the medicine and get UK spending aligned closer to earnings. The sort of thing we do every month when we check our bank balance and decide if we can afford that new Multistrada/expensive meal out/holiday, etc. If we owned and controlled our own bank, we may start to go into the red also. Spending our way out of a recession through artificially generating growth just doesn't make sense to me and the good old US of A with it's $16 Trillion of debt seems to prove the point. One day that debt will bite them back. Are we going to the dogs? Depends on your circumstances and like many countries in the world, if you have enough money, life can be good. If you are out of work and without money then your perspective is very different. With interest at 0.5% my mortgage is very cheap money and more than offsets my lack of salary increase. I suspect I am not alone.
Something I didn't know until recently which also shocked the source of the info when he found out about it (he is recent ex-military and on this forum) is that the vehicles used by the MOD aren't owned by them, they are leased. AL
I think we're due (overdue?) a rather nasty killer virus pandemic. The last one wiped out many multi-millions. That'll help take care of the over population problem. SARS never really took off but fear not, there'll be another one along soon. - If it happens in our lifetime then we'll have something to moan about. On the financial overspend problem, I've never understood why it costs so much to keep convicts in jail. Some of the figures that get bandied about (anywhere between 10 and 20 grand per prisoner per year I've heard) seem a tad excessive. Big drain on the budget. Where's the expense in banging people up come from? Whatever, can't ship 'em out to Australia any more.
Dunno why you'd be shocked at that. It's just an accounting trick. You either buy the kit and depreciate it over (say) 5 years, or you go for a 5 year lease on it. On the one hand you actually need to have all the cash to begin with (tricky, as it implies that your budget for this year is also covering your costs for the next 4 years), on the other you don't. Not too dissimilar from mortgaging your house. Of course, you need to pay the leasing company something, but let's face it, stumping up for an aircraft carrier in year 1 must put your budget under a severe strain, so you'd probably look for other options.
A sister of mine worked on the periphery of problem teenagers in care. A conservative estimate of how much they cost per year is £100k. The females then get banged up, get given a flat and raise the next generation of problem children. There is a whole raft of carers, social workers and 'professionals' making a living providing that care. It is a never ending circle. £10k-£20k per prisoner is cheap.
Due to a technical fault - we have you by the balls BBC News - UK gas prices surge on supply fears BBC News - SSE boss Ian Marchant warns of risk of 'lights going out'
Getting out of a recession by using an injection of public expenditure to prime the pump works very well. Except that if the starting point is an excessive overhang of public debt, that Keynesian option is sadly unavailable. That is the position in Japan at the moment. The UK's position is awkward, but nowhere near as bad as Japan's.
[QUOTE=dukesox;137065 The big problem with this theory is that it is the state that pays the digger and the filler.....etc etc think the key factor is those two are also paying tax, and not being as such a direct drain thru benefits etc. if they didn't do this, and were on the dole, would the taxpayer be any better off?
