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-- Finally, the UK's economy grew about twice the forcecast rate during the recently ended Third Quarter.
Was to be expected.. it is after all a right wing government that is in power. They seem to get better ratings from US owned ratings agencies.. Yes I have zero respect for those agencies since they graded sub-prime crap as AAA.
And growth was 0.8%.. hardly something to brag about. Wait till the cuts are in, and I would wager that growth will poof.
Pete, your dislike of credit ratings agenicies is pretty widely broadcast! :2razz:
I doubt it, 1.2% in the first qaurter was higher than expected but we were expecting 0.4% growth. I think it'll be nearer 0.5 / 0.6% when the dust settles however the underlying trend continues to be strong.
Try this link. We're a strong economy and will recover - we're more likely to anyhow with better than expceted figures as this changes the mood within the country and brings us confidence.
Next quarter might dip - but in the next 3 or 4 quarters I think you'd lose your wager.
A mixed blessing. Not being able to borrow money would ruin the economy, government spending was unsustainable. Cameron can either tax more or spend less, both affect consumer spending. When economic growth is such a concern, as it has been the last 4 years, I prefer the latter.
The economic slowdown from reduced UK government spending has not hit yet, when it does the UK economy will see a slowdown.
-- If private enterprise has not picked up when the government cuts come, then the UK will enter a Ireland or Greece type slowdown.
I doubt that the UK private enterprises have the resources to increase economic activity yet (debts have not been worked through)
-- Not being able to borrow money would ruin the economy, government spending was unsustainable. Cameron can either tax more or spend less --
-- They have not revised the first quarter yet I think. Also, 0.8% growth is still not much in an economy that requires certain growth to even maintain the status quo. While I agree the UK is not as bad as the US (which requires 3% growth a year to keep the status quo) it is still not good enough to claim some sort of victory --
-- I agree, it all has to do with confidence --
-- Cutting up to 2.5 million jobs will hurt as well as the lower spending from government. The private sector still has credit issues and is not really growing much.
Well, both countries are known to pay their debts, unlike a country like Italy who, before the euro, revalued its Lire every other year. I think the rating system is up for improvement but we discussed your conspiracy theory before, I'm willing to explore the possibility but I don't see any clear cut evidence. In my view, America's spending power and the worlds banker the UK, have a huge influence on the financial market, no surprise they have less difficulty raising capital.The UK had and has no problems loaning money... that is the insane part. The UK budget deficit is one of the worst in the industrialized world, their debt vs GDP is going up faster than any big nation (other than the US) and yet they pay next to nothing on the debt they take out.
If there had been any reality in the situation, the ratings agencies would have downgraded the UK (and US) long ago to reflect the pathetic state their economies were and that would have raised their lending costs. But it did not happen, so they are paying next to nothing for loaning more and more money. That is why the system in my opinion is broken. The US and UK have been rewarded for having massive deficits, where as all others have been punished.
Well, both countries are known to pay their debts, unlike a country like Italy who, before the euro, revalued its Lire every other year. I think the rating system is up for improvement but we discussed your conspiracy theory before, I'm willing to explore the possibility but I don't see any clear cut evidence. In my view, America's spending power and the worlds banker the UK, have a huge influence on the financial market, no surprise they have less difficulty raising capital.
-- The UK has come near or out right defaulted on debt several times. It does not have a long track record of financial stability that many people think it has. It was bailed out by the IMF in the 1970s for example. And yet it has this false reputation of being a solid economy, when history proves otherwise --
Do you have any other examples of near-defaulting, I'm interested.
I can think of crises - i.e. IMF in the 70's, Black Wednesday etc.
--The last time any defaulted or underwent restructuring in western Europe was Italy.. in 1940 (minus Greece last year of course). So in all this talk of sovereign debt crisis.. is more hype that reality if you ask me. No major nation has defaulted in the industrialized world since Italy in 1940..
-- As for out right defaulted (UK/England speaking), I admit we have to go back a long way, to before the Empire, but it has happened. English Kings were not the best book keepers out there...
That does however contrast with your previous picture - we have crises like everyone else. I'm not pretending the UK is perfect: it's not, but neither is it (anymore) about to go totally insolvent. We have periods of financial stability as well as periods of (self inflicted sometimes) instability - much like any other country.
That was my suspicion too.
-- so why are the US and British experts and media talking up the US and UK constantly while talking down the rest?
I agree, the US has the "reserve currency" status, and that makes it easier for the US to have massive deficits and debt. But we are still rewarding the US for taking more and more debt... its 10 year yield has gone down to record levels while its debt (post WW2) has gone up and up, along with its deficit, and there is no plans what so ever to contain the problem.
I can’t think of a logical reason for it, doesn’t Norway have a positive balance, do they even have debt? My point was that London is the financial heart of Europe, a position they took over from the dutch centuries ago. I don’t have an explanation for these ratings though, they don’t always make sense to me either. We spoke about Greece, Italy, Portugal and Spain earlier this year, I’m sure we still disagree on whether they got fair ratings or not.However for the UK it is another matter. The UK has come near or out right defaulted on debt several times. It does not have a long track record of financial stability that many people think it has. It was bailed out by the IMF in the 1970s for example. And yet it has this false reputation of being a solid economy, when history proves otherwise. Personally I think it is because the UK claims to have founded the financial system we know today, despite it being the Dutch. Granted the yields have risen of late (considerably) but it is still no where near where I would expect it to be. And it is still lower than a country like Norway... the most solid state finances on the planet... come on.
In general I agree but I also realise that economy doesn’t deal in absolute truths. What would you suggest to improve the accuracy of these ratings?Ratings and yields should be on facts and figures, not supposed historical fact and wishful thinking. Ratings are far too important in our society these days (regrettably) and have to be as accurate as possible on existing economic facts and future economic facts.. not historical (or supposed historical). As it stands now, it is not.
I've not been aware of UK media people talking up the UK. In fact there was a major feature this weekend from Gary Indiana which showed a very different picture than one of glowing prosperity and growth. Of course, that's not the whole of the US - but you won't find images / scenes like that in many Western European nations anymore.
I think we will see that change the coming decade. During the credit crisis and the recession, investors bought securities because they were relatively safe compared to stock, real estate and bank loans (at the time). Eventhough we see more euro and yen reserves after the crisis, these currencies are also unstable and not without debt, the dollar still is the worlds reserve currency and as long as americans buy chinese products and american securities, and the chinese keep buying american securities for their dollars in return, we will see the distortion you describe.
I can’t think of a logical reason for it, doesn’t Norway have a positive balance, do they even have debt?
My point was that London is the financial heart of Europe, a position they took over from the dutch centuries ago.
I don’t have an explanation for these ratings though, they don’t always make sense to me either. We spoke about Greece, Italy, Portugal and Spain earlier this year, I’m sure we still disagree on whether they got fair ratings or not.
In general I agree but I also realise that economy doesn’t deal in absolute truths. What would you suggest to improve the accuracy of these ratings?
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