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[ZombieFred]

This year will be around 10%, next year around 7%, the year after 4% and after that 2-3%. Those figures are actually higher than estimated in November, but it's not a problem.

Going any slower than that and the debt markets would lose confidence in our ability to pay our way which would send Gilt yields up and our interest payments would increase by a large amount which would either cause higher than expected borrowing (it has already happened this year in October and November where debt interest coming in higher than expected has caused PSNB to go up) which puts us into a vicious cycle of cutting spending to pay for debt interest which would lead to lower growth and more debt etc... See Ireland or Greece for this exact problem.

If Labour were in power we would be nailed on this path, I speak to sovereign debt traders a lot and they are certain that Labour's plan of reducing the deficit by half over the term would be too slow and the gilt yields would have forced their hand. One guy said that Labour would eventually have made the same cuts to public spending but we would have much, much higher debt interest payments (something like £100bn per year vs £60bn now) because creditors would demand a higher risk premium. People can say you can borrow your way out of debt (increasing GDP faster than debt) where debt falls as a proportion of GDP, see the USA for this example or read anything by Krugman to get a better understanding. The problem with this is that increasing government spending and borrowing more to stimulate only delays the inevitable and makes the resulting crash much larger. It is like mortgaging your future for a few years of peace. It is extremely short-termist and that is the Labour plan for the UK, it would leave us poorly placed to withstand further shocks to the world economy.

I'll put it into context, you have a house worth £100k, and other items worth a further £10k for a total of £110k and a long term debt of £60k securitised against the house. Your net position is £50k and your debt as a proportion of your total wealth is around 55% which is perfectly manageable. Over the next 5 years the value of you house increases and you decide to increase you mortgage to £100k but because the value of you home is now £200k your net debt position has actually gone down from 55% to 48%. Sadly the following year you lose your job and there is a recession. Your house price crashes from £200k to £150k and you have to sell your current assets to pay your off credit card and short term loans. Your net debt position is now 67% but you have no job to pay it down. You decide that the only way you can pay your mortgage is to borrow money and invest it yourself, the problem is that you're not very good at it, but either way you do make some money, more at least than the loans are worth. Your debt now stands at £150k (mortgage plus borrowed amount for investment) and your assets are worth around £240k so your net debt position is 62.5% which is lower than before, great, right? Well no, the problem is that when you borrowed the £50k to invest your creditworthiness was quite poor and you could only agree to interest payments of 10% per year plus you mortgage repayments at 4% interest only. Because of this you are unable to reduce your stock of debt as any money you make is spent on interest for your debts and running your house (feeding your kids, wife etc...). But life is good and you have actually decreased you net debt position so the creditors are placated.

Bad news though, another recession has come the money you had invested is now not worth as much as you thought it was and your assets are now valued at £175k and your debt is worth £150k, your net debt position is now 85%, your creditwothiness is in the toilet and you can no longer borrow from reputable lenders but your still have to pay £9k in debt interest for your mortgage and loan, luckily your wife is great at debt management and finds a way to come up with £9k by cutting household expenditure, your kids go to state school now and you have given up on your annual holiday to Africa. The problem is that you no longer have a way of making money as your creditworthiness is still in the toilet lenders are only willing to lend you small amounts of money for penal interest rates so you can't do your investment trick again and you can't find a job due to the recession. The following year you decide to borrow £20k at 20% a year interest because you need to make money your net debt position is now 95% and your interest payments are £13k per year, sadly you are very poor at investing and you repeat the same mistakes, and your investments are valued at just 50% of their original value. Your net debt is now at £170k and your assets are worth £185k, but your interest payments are £13k per year, you have no job and no way to pay the interest. You end up borrowing on your credit cards to pay the interest but that just increases your debt load for no return. Your debt is now increasing and there is no asset increase, your net debt position is now 99% and you have no way of getting it down. The only way to get the figure down is to declare bankruptcy, and fuck all of the people you owe money to.

Sorry for the long post, but that was economics 101 and how countries fall into the debt cycle.

Thanks for the reply, it was a good read. I'm rather supportive for these decisions myself, even if we're going to face the repercussions of cuts in this country. It’s the right thing to do so we can try and get in a healthy and open position for this country’s economy and have a good state of living. The public sector will have the biggest effect out of this, but hopefully the opportunities in the private sector or other areas for any skilful people will be able to bounce back on their legs fast, or they could try other opportunities now that the tax breaks are open for starting private business.

I live in Leicester and work at a secondary educational school as an IT Technician that is funded by the Leicester Council. The educational system is quite safe in terms of cuts because of how the funding works in the educational system. But some schools can be affect in terms of future school cut backs (BSF project for example) and not get their schools refurbished or new mass equipment any time soon. Those are schools I feel sorry for but luckily it’s better than what other sectors are going to face in the council unfortunately. Quite amusing that the council has just finished doing the single status pay agreement (that all other councils have done quite some time ago) so it shows how terrible some of the bureaucracy works in the government, haha.

 

[Dark Machine]

Anyway rant off. I just get very irritated by people who blame us for everything

Really? I get very irritated by Banks and Massive Corporations not paying taxes, dictating to my country's government and then trying to blame everything on ordinary people (who are paying for that massive recapitalisation of the financial sector) because of course 'the market is flawless'.

Bankers aren't the only reason for the financial crisis, and they are easy targets for poor journalists who don't research properly. But you don't do yourselves any favours whatsoever, especially when you begin making threats like the one below.

when my job moves to Hong Kong or New York and my income (and very large tax payments) goes with it don't tell us we didn't warn you.

Go on then. You're threats 'irritate' me anyway.

 

[zomgbbqftw]

Thanks for the reply, it was a good read. I'm rather supportive for these decisions myself, even if we're going to face the repercussions of cuts in this country. It’s the right thing to do so we can try and get in a healthy and open position for this country’s economy and have a good state of living. The public sector will have the biggest effect out of this, but hopefully the opportunities in the private sector or other areas for any skilful people will be able to bounce back on their legs fast, or they could try other opportunities now that the tax breaks are open for starting private business.

I live in Leicester and work at a secondary educational school as an IT Technician that is funded by the Leicester Council. The educational system is quite safe in terms of cuts because of how the funding works in the educational system. But some schools can be affect in terms of future school cut backs (BSF project for example) and not get their schools refurbished or new mass equipment any time soon. Those are schools I feel sorry for but luckily it’s better than what other sectors are going to face in the council unfortunately. Quite amusing that the council has just finished doing the single status pay agreement (that all other councils have done quite some time ago) so it shows how terrible some of the bureaucracy works in the government, haha.

Hey no worries, I've come up with a similar construct for the government plans.

Starting at the point where your house price has collapsed to £150k and your debt is worth £100k:

You decide that you can no longer afford to send your children to private school and that African holidays are a luxury you can no longer afford either. That saves you £9k per year straight away and you decide that you can borrow just £30k which you decide to invest into super safe places, but it will yield just enough to pay the interest on the mortgage and the loan itself. Your debt is now valued at £130k and your assets are worth £190k, your net debt position is 68%. In the meantime you decide that your current path is not good enough, you decide to supplement your income by working freelance (read: exports), at first it isn't worth much, just £5k per year, but it does pay your mortgage interest. Your investment has been relatively stable because of the super safe nature of the trust, at the end of the year you have assets measured at £210k, but you had to borrow £10k to cover your expenses because your freelance business isn't doing too well as you aren't very good at it yet. Your net debt position is now 67%.

Bad news, a recession has hit the world, but due to the nature of your super safe investments you are relatively safe and your assets are valued at £200k, but you are getting better at the freelancing game and you make £10k in it over the year. You decide that given the times you need to cut back further, you now eat Tesco value and buy second hand goods, this means you only need to borrow £5k in the year. Your assets are worth £215k and your debt is valued at £145k giving you a net position of 67%. The following year you make £20k in your freelance game and your investment trust makes £5k on the original £30k loan. Because of your austerity measures you don't need to borrow any money this year, but you do spend money on interest. At the end of the year you have assets worth £220k (£230 less £10k loan interest) and your loans have been static so your net debt position is now 65%. The following year your freelance business makes £40k and you decide to pay off two thirds of the £30k loan, your investment money is still paying for your mortgage interest, and even though the yield is quite low you decide to stick with the super safe structure. You debts are now valued at £125k and your assets are worth £240k, your net debt position is now 52%. More bad news, a recession has hit the world, your freelance business takes a hit, it now only makes £20k for the years versus £40k last year, it means you have to borrow £20k to cover your expenses. Your assets are worth £260k and debt is valued at £145k, you are able to borrow at relatively low rates so you only pay out £1k in interest, so your assets are now worth £259k. You net position is 55%.

So, after two further recessions (the first one I have included already from the first scenario) you are not bankrupt. In fact you are very well protected, once your freelance business picks up you can pay down your debt further and maybe send your kids to private school again, albeit not a top one. You have done this without borrowing money for current spending. After 3-4 years of hard work you have paid your debts down to the original £100k of just your mortgage. You decide that you can invest money in other people's companies (buying sovereign debt). Your debt position has returned to it's original position of around 30% and you did it without relying on a debt fuelled housing bubble.

Obviously this is a simplified model, but that is what the government are trying to do over around 10-15 years rather than the 5 years that I have written about.

 

[Your Excellency]

Zomg's posts are making me confident in the Conservatives financial plans. As a diehard left-winger, this is freaking me out. Stop it, dude.


Actually, Zomg - what's your opinion on the financial plans within the manifestos of the Lib Dems (and Green Party - although I doubt you or anyone really knows much about their financial plans)? Very curious as to whether anything is in there which you think would be disastrous for the economy etc.

By the way, I'm happy that this new budget has quite significantly increased the lower tax threshold, meaning that poor people earning small amounts get to have more spending power. Are they going to get fucked over some other way, though, as a result of these financial measures?

 

[zomgbbqftw]

Zomg's posts are making me confident in the Conservatives financial plans. As a diehard left-winger, this is freaking me out. Stop it, dude.

Haha, sorry dude!

Actually, Zomg - what's your opinion on the financial plans within the manifestos of the Lib Dems (and Green Party - although I doubt you or anyone really knows much about their financial plans)? Very curious as to whether anything is in there which you think would be disastrous for the economy etc.

Well the Lib Dem plans are ok, but relatively unfinished. They rely on extremely unrealistic tax collection from current evaders. You can't build spending plans on collecting tax from these guys. I had a look at the Green spending commitments, we would be living in a Soviet style state if they ever came to pass. In a globalist world you can't raise taxes as much as they want to without a massive brain drain.

By the way, I'm happy that this new budget has quite significantly increased the lower tax threshold, meaning that poor people earning small amounts get to have more spending power. Are they going to get fucked over some other way, though, as a result of these financial measures?

The working poor have done very well out of this budget, they will be better off. Unless you are on benefits you will do well out of this budget, the biggest losers from the current government spending plans are people on benefits, some will lose around £80/w but most will be around £40/w worse off. It is mostly through housing benefits though which probably won't effect the claimants themselves, more likely the landlords who rent to the councils at above market rates. So no real losers there either, people talking about how people on benefits will be forced to move out aren't seeing the whole situation, the landlord needs to rent his house and if the tenant (local housing assoc) is only willing to go so high it will depress the market and the landlord will have to like or lump it.

Other losers are well off, my boss paid around £1.1m in tax last year up from £800k the year before. I would rather not go into my personal arrangements, but I paid a lot more in tax this year too.

Oil and gas companies are big losers, banks are big losers and middle classes lose the child benefit which they should never have had in the first place.

16-18 year olds lose EMA, but I know from when I was in college that the money went on booze, fags and DVDs, so not much of a loss there. I have heard EMA will be replaced with a better targeted system whereby vouchers for study equipment and travel expenses will be given instead of money. So no real losers there either.

The biggest losers are students who don't go to a Russell Group university. If you go to a 'lesser' university to do a nonsense degree then you will end up indebted with no prospects for a job. The solution is for more people to go into unpaid apprenticeships and for the government to pave the way for companies to be able to train people and not pay them. Sounds sucky, but it is the only way people can get trained and business will tolerate it.

 

[zomgbbqftw]

Really? I get very irritated by Banks and Massive Corporations not paying taxes, dictating to my country's government and then trying to blame everything on ordinary people (who are paying for that massive recapitalisation of the financial sector) because of course 'the market is flawless'.

Obviously. Where did I blame ordinary people though? I just said some are responsible for over borrowing just as banks are responsible for over-lending. If people didn't want what they couldn't afford it follows that the banks wouldn't have lent...

Bankers aren't the only reason for the financial crisis, and they are easy targets for poor journalists who don't research properly. But you don't do yourselves any favours whatsoever, especially when you begin making threats like the one below.

Go on then. You're threats 'irritate' me anyway.

It's not a threat. I would actually like to stay here, it's why I turned the move down when it was offered last year. If the bank decides to move the whole business then I will have no choice, it would be that or no job.

8% of GDP and ~ £40bn in tax receipts which people are willing to throw away because you don't like our lot. It seems like you are cutting off your nose to spite your face.

Oh, and don't believe the hype about Barclays never paying tax, they paid little to no tax last year because they were able to write down a massive amount of losses in previous years, that's done now and this year I think Barclays will pay a lot of corporation tax, they still have a around £2bn in written down losses, but they made £6bn in profits so they will be taxed at the old 8% rate on overseas profits and 28% on domestic profits, that will go down to 5.75% and 26% this year, but it will amount to a lot of money.

It's not our fault that Gordon Brown destroyed the regulatory system and defanged the Bank. I think we are responsible as an industry to the extent that we should not have lent to unsuitable people, but it was Brown who gave Fred the Shred a knighthood for services to banking, it was Brown who forced a shotgun wedding of Lloyds TSB and HBOS. A Scottish PM saved two Scottish banks by fucking over the English taxpayer, Labour saved a Northern bank (Northern Rock) because an election was expected that year (the election that never was) and that fucked over the English taxpayer, now NR are said to be going back to the bad old ways which lead to their downfall, the FSA aren't going to do a damn thing about it, they don't have the power, the Bank doesn't have the power either, not yet at least. UKFI wants a quick sale, they can see the £40bn profits for the treasury, but it would be a mistake IMO.

 

[Your Excellency]

Well the Lib Dem plans are ok, but relatively unfinished. They rely on extremely unrealistic tax collection from current evaders. You can't build spending plans on collecting tax from these guys. I had a look at the Green spending commitments, we would be living in a Soviet style state if they ever came to pass. In a globalist world you can't raise taxes as much as they want to without a massive brain drain.

See, now this is REALLY interesting. I always thought the Greens were a legitimate party with fully legitimate ideas (the main reason I never voted for them was their plan to lower the national speed limit to 60mph). My political interests have typically been social + welfare issues first, then foreign policy, and then financial issues last (because I didn't know enough about economics to really compare different ideas), but it sounds like you base your views on economics first. As do, I suspect, many conservatives. When conservatives talk politics, they talk money, whereas we sushi-eating pinko liberals tend to think Iraq, NHS, etc.

16-18 year olds lose EMA, but I know from when I was in college that the money went on booze, fags and DVDs, so not much of a loss there. I have heard EMA will be replaced with a better targeted system whereby vouchers for study equipment and travel expenses will be given instead of money.

Yeah, I'd have no issues with that. When I was in college I don't think they did EMA but they did pay for my annual bus-pass, which was awesome. To be honest I don't think you need much money for 'study equipment' anyway. A couple of paper pads and a few pens is what you need for most academic courses, although fashion/design/tech courses may have more (and have to pay for materials themselves) and so should be supported.

The biggest losers are students who don't go to a Russell Group university. If you go to a 'lesser' university to do a nonsense degree then you will end up indebted with no prospects for a job. The solution is for more people to go into unpaid apprenticeships and for the government to pave the way for companies to be able to train people and not pay them. Sounds sucky, but it is the only way people can get trained and business will tolerate it.

I'm in my third year studying Law at a university very, very low down the league tables (despite having AAAa in A-Levels*) and managed to get 2 training contract offers (ie position as a trainee lawyer) from big firms last summer, including DLA Piper. But no-one else on my course has one yet, and I seriously doubt that many ever will. I'm something of an anomaly because of my A-levels.


*It's a long story as to why I went to the uni I did, but had I understood the law firm recruitment environment as I do now, I would have taken a year out and applied to Oxford, Cambridge, Warwick, Durham etc instead of going through clearing into the shitty one I did actually go to.

 

[Ashes]

Some people especially in the borough I live in, (Tower Hamlets) really depended on the EMA. Especially, say single parent teen mothers, who we, the society at large, really need, for them to get their lives into order through education or other means, unless you want another generation of welfare residents shall we say.

Sure if you are wasting it on booze then you aren't on the poverty line, but you would be surprised how many children under 18 are.

Having said that, it was very wasteful, and we need to better means test the situation rather than hand it out gift wrapped. I for example am not for ema, in the case of being just poor. It's the people that are really really poor and need the education to get out of the 'system' as it were, that I worry about. The ones who really look for it for as an educational scholarship funds etc.

edit: we take for example stuff like access to the internet, laptops, computers for granted.

 

[kitch9]

Obviously. Where did I blame ordinary people though? I just said some are responsible for over borrowing just as banks are responsible for over-lending. If people didn't want what they couldn't afford it follows that the banks wouldn't have lent...



It's not a threat. I would actually like to stay here, it's why I turned the move down when it was offered last year. If the bank decides to move the whole business then I will have no choice, it would be that or no job.

8% of GDP and ~ £40bn in tax receipts which people are willing to throw away because you don't like our lot. It seems like you are cutting off your nose to spite your face.

Oh, and don't believe the hype about Barclays never paying tax, they paid little to no tax last year because they were able to write down a massive amount of losses in previous years, that's done now and this year I think Barclays will pay a lot of corporation tax, they still have a around £2bn in written down losses, but they made £6bn in profits so they will be taxed at the old 8% rate on overseas profits and 28% on domestic profits, that will go down to 5.75% and 26% this year, but it will amount to a lot of money.

It's not our fault that Gordon Brown destroyed the regulatory system and defanged the Bank. I think we are responsible as an industry to the extent that we should not have lent to unsuitable people, but it was Brown who gave Fred the Shred a knighthood for services to banking, it was Brown who forced a shotgun wedding of Lloyds TSB and HBOS. A Scottish PM saved two Scottish banks by fucking over the English taxpayer, Labour saved a Northern bank (Northern Rock) because an election was expected that year (the election that never was) and that fucked over the English taxpayer, now NR are said to be going back to the bad old ways which lead to their downfall, the FSA aren't going to do a damn thing about it, they don't have the power, the Bank doesn't have the power either, not yet at least. UKFI wants a quick sale, they can see the £40bn profits for the treasury, but it would be a mistake IMO.

It was Brown who sold all the gold, at the point the market was at its lowest in decades........ It then promptly trebled.

Labour are fiscal nutters IMO.

 

[Your Excellency]

we take for example stuff like access to the internet, laptops, computers for granted.

I didn't have internet at home when I was in college and did okay, but that's because my college library was open for fairly long hours. I would prefer to see cuts achieved by taking out EMA to be put into education funds to pay for more computers, longer library opening hours, more lunchtime classes, and smaller class sizes, but all of that stuff is getting F'd up the A too.


[Anyway, I really should get out of this thread and finish my coursework which is in for tomorrow.]

 

[zomgbbqftw]

See, now this is REALLY interesting. I always thought the Greens were a legitimate party with fully legitimate ideas (the main reason I never voted for them was their plan to lower the national speed limit to 60mph). My political interests have typically been social + welfare issues first, then foreign policy, and then financial issues last (because I didn't know enough about economics to really compare different ideas), but it sounds like you base your views on economics first. As do, I suspect, many conservatives. When conservatives talk politics, they talk money, whereas we sushi-eating pinko liberals tend to think Iraq, NHS, etc.

Well lowering the speed limit would save a lot of money for motorists, a car uses around 10% less fuel at 60mph than at 70mph, there are legitimate reasons to do it, but yes the Greens are basically the communist party in all but name. I remember the figures adding up to something like £85bn in new taxes and the highest personal and business taxes in the western world.

I do think about that stuff, but I always think about how it has to be paid for first, we can't have good public services like the NHS and good education with well paid teachers without a healthy private sector, you can't overtax businesses and expect them to stick around and pay for profligacy in the public sector. I personally have a very esoteric set of views. I am a classic liberal, I believe in the small state, but I also believe that vulnerable people should be looked after by society (disabled people, orphaned children, those with learning disabilities etc...) but I don't think unemployment should be a way of life. There are many people who work the system and never work a day of their lives and through a combination of having a lot of children, jobseekers, and incapacity benefits live a decent life with Sky and stuff that the working poor could never afford. I also believe in the freedom of people not to be bothered by the government and that Britain should opt out of the social and political chapters of the EU, but maintain membership of the freedom of movement and trading areas.

Yeah, I'd have no issues with that. When I was in college I don't think they did EMA but they did pay for my annual bus-pass, which was awesome. To be honest I don't think you need much money for 'study equipment' anyway. A couple of paper pads and a few pens is what you need for most academic courses, although fashion/design/tech courses may have more (and have to pay for materials themselves) and so should be supported.

If the replacement system works in the way I have described we think it will it will cost around £200m to implement, while the EMA costs more than double at £550m per year.

I'm in my third year studying Law at a university very, very low down the league tables (despite having AAAa in A-Levels*) and managed to get 2 training contract offers (ie position as a trainee lawyer) from big firms last summer, including DLA Piper. But no-one else on my course has one yet, and I seriously doubt that many ever will. I'm something of an anomaly because of my A-levels.


*It's a long story as to why I went to the uni I did, but had I understood the law firm recruitment environment as I do now, I would have taken a year out and applied to Oxford, Cambridge, Warwick, Durham etc instead of going through clearing into the shitty one I did actually go to.

So you can see what I mean, I don't want to be rude or harsh, but it seems as if many people at your university shouldn't really be at uni. They should be doing apprenticeships or some other form of hands on training. These students are going to leave with around £25k worth of debt, and no job prospects, that is a terrible situation to be in and I don't know what any government could do to help these graduates.

I myself did Physics and Chemistry at uni, and was recruited to work where I do now, but I went to a top uni and everyone I know now has a job and has the ability to pay their loans off.

 

[Ashes]

I didn't have internet at home when I was in college and did okay, but that's because my college library was open for fairly long hours. I would prefer to see cuts achieved by taking out EMA to be put into education funds to pay for more computers, longer library opening hours, more lunchtime classes, and smaller class sizes, but all of that stuff is getting F'd up the A too.


[Anyway, I really should get out of this thread and finish my coursework which is in for tomorrow.]

Which would be hard to do for the poorest, the single parents and those in rural areas during winters, and especially those who go to colleges in different boroughs, and those whose libraries are completely shit or closing down. etc.

The Tories said several times that they were not gonna scrap it, but they did. And down the line, everybody is going to be in school/college until the age of 18, when mandatory school leaving age, is upped to 17 in a couple of years and 18 a couple of years later.

edit: 2015, is when school leaving age is increased to 18.

Like I said before, it was meant to be a sort of incentive to get people attending colleges, when it was first introduced.

We need only find and help the people, whose education is being blocked, because of a lack of funding.

 

[Ashes]

So you can see what I mean, I don't want to be rude or harsh, but it seems as if many people at your university shouldn't really be at uni. They should be doing apprenticeships or some other form of hands on training. These students are going to leave with around £25k worth of debt, and no job prospects, that is a terrible situation to be in and I don't know what any government could do to help these graduates.

I myself did Physics and Chemistry at uni, and was recruited to work where I do now, but I went to a top uni and everyone I know now has a job and has the ability to pay their loans off.

You did physics and chemistry, and now you work in finance; yes?

 

[zomgbbqftw]

You did physics and chemistry, and now you work in finance; yes?

Yeah, no jobs in my field. I had the choice of going into finance or doing a doctorate. I didn't want to stay in education, or go into research so I took the finance job. I work as an investment analyst, but my boss wants me in the macro-economic policy unit.

 

[Your Excellency]

So you can see what I mean, I don't want to be rude or harsh, but it seems as if many people at your university shouldn't really be at uni.

Oh, I agree totally.

Most people at my uni will need to attain a 2:1 in their degree AND do well on a post-graduate course first if they want to be competing with someone who has just come out of Nottingham Uni with a 2:2. But many won't get a 2:1, or won't do a post-grad, so they're never really going to be competing for the graduate jobs. Instead, they're going to be competing for non-graduate jobs with people who have far more practical work experience than they do. Their degree at that point is pretty much worthless.

 

[zomgbbqftw]

On the EMA stuff, the situation as I understand it:

David Cameron like the idea of EMA and he likes the idea of helping poor but smart kids go to college/sixth form and maybe even university. The chancellor doesn't like the way EMA is administered, in real money and indiscriminately. He says that Cameron's goal of underprivileged kids going doing further education can be achieved for a lot less money and they are working on a system to replace EMA that will tie into the pupil premium.

 

[zomgbbqftw]

Not to beat a dead horse, but this is why the UK is in the shitter:

Between 2000 and 2010, there was a 53 per cent rise in real-terms government expenditure, but GDP went up by only 17 per cent.

That factoid just popped up on my IM.

 

[Ashes]

Yeah, no jobs in my field. I had the choice of going into finance or doing a doctorate. I didn't want to stay in education, or go into research so I took the finance job. I work as an investment analyst, but my boss wants me in the macro-economic policy unit.

So you have a useless degree but still got a great job? I'm actually pretty impressed that you made the right career choices at the right time; indicates a good head on young shoulders; but why did the system work for you and not for others? That's what is interesting to me.

 

[Salvor.Hardin]

What's your opinion on the gilt yield movements? Induced by a fear of increasing inflation and debt burden or fueled by the prospects of economic growth?

 

[zomgbbqftw]

So you have a useless degree but still got a great job? I'm actually pretty impressed that you made the right career choices at the right time; indicates a good head on young shoulders; but why did the system work for you and not for others?

Because I got a 1st class degree in a science. Most people in this office have degrees in science, it's not wholly unrelated. Companies these days care about your aptitude to learn, and my degree showed that I was able to learn complex stuff and apply it to the real world.

 

[anonnumber6]

You did physics and chemistry, and now you work in finance; yes?

You can get a job in finance with almost any degree in the UK, it is just important you go to a 'target' University.

 

[Ashes]

Because I got a 1st class degree in a science. Most people in this office have degrees in science, it's not wholly unrelated. Companies these days care about your aptitude to learn, and my degree showed that I was able to learn complex stuff and apply it to the real world.

It's about the university experience, which lent credence to your ability, and not what you actually studied. Fair enough.

You can get a job in finance with almost any degree in the UK, it is just important you go to a 'target' University.

perhaps.

 

[zomgbbqftw]

What's your opinion on the gilt yield movements? Induced by a fear of increasing inflation and debt burden or fueled by the prospects of economic growth?

The latest budget just showed that the fiscal retrenchment is slower than the government said it would be in November. The markets are responding to that. If the government had announced additional spending cuts the gilt markets would have responded positively.

The markets care about one thing and one thing only, the ability to pay your way. If there was an election on with a Labour win and they implemented their spending plans there would be a clear movement in gilt yields and the cost of borrowing would go up by a significant amount.

Generally the UK is seen as a safe house just like Germany, but this has shaken that belief a bit. It will come back as the figures improve.

 

[Salvor.Hardin]

Thanks. I'll be interviewing with an investment bank down in London soon for M&A and although I have a keen macro understanding of the economy (I'm an economics student), connecting that to financial player behaviour can often be tricky.

 

[zomgbbqftw]

You can get a job in finance with almost any degree in the UK, it is just important you go to a 'target' University.

The list of acceptable degrees is as follows:

Economics and any related subject
Physical science like Physics or Chemistry
Computer Science or any type of complex software engineering degree
Maths/Actuarial science

That's about it. Some banks prefer Maths graduates to others, but generally if you have done economics or a science (not including Biology or Psychology) they will take you.

 

[radioheadrule83]

Not to beat a dead horse, but this is why the UK is in the shitter:

Between 2000 and 2010, there was a 53 per cent rise in real-terms government expenditure, but GDP went up by only 17 per cent.

That factoid just popped up on my IM.

I wonder how much (if any) of that is accounted for by the £20bln+ spent on Afghanistan and Iraq in addition to the money already provided by the core defence budget since 2001? That is apparently over ten times what would be needed to scrap tuition fees in England. Is the £850bln+ of cash injection / investment / bail-outs to the finance sector factored out of those figures?

 

[anonnumber6]

The list of acceptable degrees is as follows:

Economics and any related subject
Physical science like Physics or Chemistry
Computer Science or any type of complex software engineering degree
Maths/Actuarial science

That's about it. Some banks prefer Maths graduates to others, but generally if you have done economics or a science (not including Biology or Psychology) they will take you.

For the roles that require highly quantitative skills that is the general type of degree you need but for M&A almost any degree from a target University seems to be acceptable.

 

[f0rk]

http://www.bbc.co.uk/news/uk-politics-12851611

If we keep doing this we won't find anything to bloody disagree on in the bloody TV debate

lololol Clegg is whipped.

 

[Dark Machine]

The list of acceptable degrees is as follows:

Economics and any related subject
Physical science like Physics or Chemistry
Computer Science or any type of complex software engineering degree
Maths/Actuarial science

That's about it. Some banks prefer Maths graduates to others, but generally if you have done economics or a science (not including Biology or Psychology) they will take you.

Wow. Could've used being told that back in '06 instead of: "go to a Russell Group Uni and you'll be fine". I did 'East Asian Studies' and had several classes in geopolitical economy, working laws and conditions, investment and development etc. But it's the name on the tin that counts. Meh, I'm off the China anyway, living and learning Chinese might help me a bit.

And just to be clear. I don't have a problem with 'your lot' in particular, and I'm sure you won't like being the 'avatar tory banker' in this thread, however I do have a problem with the amount of power that has been transferred into the hands of the financial sector in particular, coupled with an apparent absolute disregard for 'public goods' and social needs as a whole. Again this isn't you personally, it's the apparent concerted actions of those powerful companies within the City.

 

[zomgbbqftw]

£435bn in 2000 in 2010 terms using 2.2% inflation per year, £670bn last year which is an increase of 54%. I think that is only departmental spending, it includes spending that is locally provisioned since it comes out of some form of taxation whether council tax or central government.

The £850bn figure is off the books anyway, the direct cost to the government is something like £75bn which was used to recapitalise the banks, the £850bn is the estimated liability of RBS and LBG I think.

 

[Chinner]

.

 

[zomgbbqftw]

Wow. Could've used being told that back in '06 instead of: "go to a Russell Group Uni and you'll be fine". I did 'East Asian Studies' and had several classes in geopolitical economy, working laws and conditions, investment and development etc. But it's the name on the tin that counts. Meh, I'm off the China anyway, living and learning Chinese might help me a bit.

Dude, I don't know what your problem with me is, but I was talking specifically about going into finance. FWIW your degree sounds quite interesting, but we were told at college that going to a RG uni was more important than the course you took. If you didn't get that advice then your school/college is to blame. I hope you do well in China, it's an awesome country, I spent a summer there travelling with my girlfriend, where abouts are you going to be based?

And just to be clear. I don't have a problem with 'your lot' in particular, and I'm sure you won't like being the 'avatar tory banker' in this thread, however I do have a problem with the amount of power that has been transferred into the hands of the financial sector in particular, coupled with an apparent absolute disregard for 'public goods' and social needs as a whole. Again this isn't you personally, it's the apparent concerted actions of those powerful companies within the City.

Also not a Tory, not a member of the party I don't make up my mind until I see what each party stands for. I was close to voting Lib Dem at the last election because of their £10k allowance policy and the pupil premium but the rest of their spending plan was rubbish. The coalition is great (IMO) because they are implementing the best of both worlds while cutting the deficit. The alternative would have been carnage for UK PLC.

The transfer of power was completed by one J.G. Brown when he formed the tripartite system of regulation. The FSA was toothless the Bank was defanged and the Treasury turned a blind eye, all under the guise of Bank independence.

I am actually of the opinion that the banks have too much power as well and the new banking regulations with the Bank in charge will probably fix it somewhat, but it is probably already too late.

 

[zomgbbqftw]

For the roles that require highly quantitative skills that is the general type of degree you need but for M&A almost any degree from a target University seems to be acceptable.

Yeah, I work with analysts, so it is mostly science and maths graduates, some comsci ones as well.

 

[Dark Machine]

Dude, I don't know what your problem with me is, but I was talking specifically about going into finance. FWIW your degree sounds quite interesting, but we were told at college that going to a RG uni was more important than the course you took. If you didn't get that advice then your school/college is to blame. I hope you do well in China, it's an awesome country, I spent a summer there travelling with my girlfriend, where abouts are you going to be based?

I don't have a problem with you personally bro! That's what I was trying to be clear about. I agree with Chinner's comment that in my ideal world you'd be working in Physics or something making great breakthroughs for humanity. I went to an RG uni, I was talking about not knowing back in 2006 that banks were looking for certain degrees in particular. I'm just pissy cos I've been jobless for 9 months after graduation despite getting a nice 2.1 degree in an interesting subject from an RG uni. I apologise for being pissy at you, you're giving out good information and I shat up the thread a bit. Like I said, you're not the problem, it's the people at the very top that are the problem for me. I didn't like New Labour at all, even back in '97 when I was but a wee boy I understood what Blair/Brown were about.

And I'm teaching at a University in either Chongqing or Gongyi, got two offers on the table right now.

 

[zomgbbqftw]

I don't have a problem with you personally bro! That's what I was trying to be clear about. I agree with Chinner's comment that in my ideal world you'd be working in Physics or something making great breakthroughs for humanity. I went to an RG uni, I was talking about not knowing back in 2006 that banks were looking for certain degrees in particular. I'm just pissy cos I've been jobless for 9 months after graduation despite getting a nice 2.1 degree in an interesting subject from an RG uni. I apologise for being pissy at you, you're giving out good information and I shat up the thread a bit. Like I said, you're not the problem, it's the people at the very top that are the problem for me. I didn't like New Labour at all, even back in '97 when I was but a wee boy I understood what Blair/Brown were about.

And I'm teaching at a University in either Chongqing or Gongyi, got two offers on the table right now.

OK no worries dude, just got the wrong end of the wrong stick!

The problem is that the job offers I was getting were for pharma, and I can't work for pharma they make me sick. The way that between them, western governments and corrupt local regimes and a compliant UN they fuck Africa good and proper, it just makes me sick. A lot of my friends from chemistry decided against working for pharma for the same reason and either went into finance like I did or stayed in academia. Personally I didn't want to stay in academia like my friends, I was sick of uni and the uni life, I wanted to have a real job and the only job offers I was getting not in pharma were in finance. I looked for a while for something in physics, but my programming skills were limited, I only did a single CS module in three years so I decided finance was it and I could change my career at a later date. Three years later and I've started looking at going to medical school, but I'm not sure I want to go back into full time education.

Dude, you have to go to Chongqing! I was there for about a week with my gf and we ended up staying with a couple of waiguoren/laowai (foreigner, get used to the word, it's like gaijin, but in Chinese) who were teaching in the uni. There is a small but tight knit ex-pat community in Chongqing, much better than Beijing and Sanlitun.

 

[Subliminal]

Its Question time day dimblets!

http://www.youtube.com/watch?v=Mc4OZFXNSGY

 

[Your Excellency]

OK no worries dude, just got the wrong end of the wrong stick!

The problem is that the job offers I was getting were for pharma, and I can't work for pharma they make me sick. The way that between them, western governments and corrupt local regimes and a compliant UN they fuck Africa good and proper, it just makes me sick. A lot of my friends from chemistry decided against working for pharma for the same reason and either went into finance like I did or stayed in academia. Personally I didn't want to stay in academia like my friends, I was sick of uni and the uni life, I wanted to have a real job and the only job offers I was getting not in pharma were in finance. I looked for a while for something in physics, but my programming skills were limited, I only did a single CS module in three years so I decided finance was it and I could change my career at a later date. Three years later and I've started looking at going to medical school, but I'm not sure I want to go back into full time education.

Isn't the drastic pay cut you'd have to take for 5 years (at least) to go back into education putting you off?! My sister is a GP but it's taken her about 10 years of exams to get to the same level of income that you're probably on right now.

Plus med school is a huge time and energy commitment* so it may be worth thinking about easier career changes (eg alternative jobs in the City?). You have a first class degree and presumably great A-levels, you don't need another degree!!


*My parent's ambition was for me to be a doctor so they made me (yes, made me!) to go to medical school straight after college. I had no interest in it, never went to lectures after the first few months and dropped out at the end of the year. My girlfriend still says 'if youd stayed in med school you could have been a doctor by now!' regularly, lol. My parents, alas, don't mention it anymore...

 

[zomgbbqftw]

Isn't the drastic pay cut you'd have to take for 5 years (at least) to go back into education putting you off?! My sister is a GP but it's taken her about 10 years of exams to get to the same level of income that you're probably on right now.

Yeah, it's a pretty big decision, I don't think I would do it until I am more financially secure. At the end of the day I earn a lot of money and my outgoings are almost non-existent since I live at my parents' house and they pay for pretty much everything. I offered them money, but they won't accept it.

Plus med school is a huge time and energy commitment* so it may be worth thinking about easier career changes (eg alternative jobs in the City?). You have a first class degree and presumably great A-levels, you don't need another degree!!


*My parent's ambition was for me to be a doctor so they made me (yes, made me!) to go to medical school straight after college. I had no interest in it, never went to lectures after the first few months and dropped out at the end of the year. My girlfriend still says 'if youd stayed in med school you could have been a doctor by now!' regularly, lol. My parents, alas, don't mention it anymore...

Yeah med school isn't easy, but I have wanted to do it since I was a kid. I really think being a doctor is my calling, I didn't do it because I had really average AS level grades and would never have gotten into uni for medicine. I ended up getting AAAb in Physics, Chem, Maths and Biology and went through clearing to do chemistry, but switched to Physics with Chemistry in the first week of uni. Lucky for me my grades were good and the course demand was low and I got into Cardiff and I got my teacher from school to put in a good word for me with the head of the chemistry school.

Dude, unless you are Indian or some other type of Asian how in the hell did your parents force you to pick a degree course you didn't want to do! I know because I'm Indian and we Indian kids do as we're told (apparently).

 

[Your Excellency]

Yep, I'm Indian. I did as I was told until I was like 21-22, I know, crazy. Thing is, my parents aren't just 'typical Indian' parents, they were way beyond that (none of my friends have ever had parents as nutty as mine). Just took me a very long time to realise it.

At least the last few years have been more chilled out, and I move away for good in September once I start the Legal Practice Course in Holborn.

 

[zomgbbqftw]

I was talking to my boss about my economy model constructs and he said he's going to use them in his seminars!

I came up with another one for how the public sector and private sector work together.

Lets say there is a farm which represents the UK, there is a farmer (the public sector) and the cow (the private sector) and the farm managers are the UK population. I'll start with a bit of a history lesson, starting in 1994.

So in 1994 the farm was doing well due to the new farmer in charge, Ken. Ken was a very good farmer and was able to cultivate a great crop to feed the cow, this in turn meant the cow was able to give good milk and every year Ken would set aside some of the cream from the milk and put it in the bank just in case there was a very cold winter. Ken drank just enough milk to keep himself healthy enough to keep the farm in good condition so the cow would continue to give good milk. In 1997 there was a management change and Ken was fired by the farm management and Gordon was put in charge. Gordon took a look at the situation and decided that Ken was doing a good job before him and just kept on the same path.

Eventually in 2001 the farm management decided to keep Gordon in charge for another four years and emboldened by his previous success Gordon decided to change course and implement his own plans. It involved drinking more milk himself so he could do more work on the farm and make an even better crop so the cow would yield even more milk. Eventually Gordon found that the cow was not yielding as much milk as he required so had to pay for extra help on the farm, but as the cow wasn't giving enough milk he had to borrow some money from a Japanese farm and buy the milk from China.

He did this until 2007 and was drinking more milk than ever from his cow, but the crop was not improving as fast as he needed for the cow to produce as much milk as he was consuming, then there was a disaster. A fire struck the farm and the crop yield went down, the cow now had a very small amount of grass to eat, Gordon decided that the only way to keep the cow healthy was to keep himself healthy so that he could work on the farm. The problem was that Gordon had become very flabby from the all the cream he had drank from 2000-2007 and was unfit to run the farm in such trying conditions. This meant Gordon had to borrow a lot of money to buy milk from abroad, there were many issues with this, the other farms were getting worried that Gordon would not be able to repay them in 10 years time when the payments were due, in that light they forced Gordon to pay a lot more interest on the loans than he wanted.

In 2010 Gordon had to go to the farm managers who were angry that the cow was doing very badly and that they were borrowing so much money from other farms. Gordon pitched his plan to the managers with his puppet managing director Alastair saying that they should stay the course of what they were doing, borrow money to buy milk from other farms so that Gordon could hire helpers to fix up the farm after the fire. The managers thought differently and decided to fire Gordon and put George in charge of the farm under the chairmanship of Dave and Nick.

George had a radically different plan, his plan was to go on a diet so that he didn't have to borrow as much money for milk to buy from other farms. This had added an added bonus that the farms lending money to George thought that George had much better chance of giving them their money back so they demanded much less interest in return for the loans.

In November 2010 George announced a series of diet and exercise measures for the next few years that was designed to make sure that the farm would be self sufficient within 5 years, George would no longer need to borrow money to buy milk to feed himself or have to hire people to help out on the farm. This had a lot of problems because going on a diet is notoriously difficult for farmers as a lot of people depend on him being fat and flabby so they can do the work he is supposed to do, but the plan was generally well received. Just recently George gave the managers an update on how his plan was going and he revealed that he had lost 4% if his fat but still had a further 57% to go, but he revealed that the exercise regime was falling behind and that the farm would need longer than he previously thought to become self-sufficient. The foreign farms who lend money to George were happy about the first part, but thought that George could do better with his exercise regime and said they would want a higher interest rate on money they lent him.

Again, sorry for the long post, but hopefully it's not too confusing, I tried my best but it turned out to be more complicated than I originally wanted.

 

[zomgbbqftw]

New ICM/Guardian VI poll out.

37/36/16/11 Con lead +1.

http://www.guardian.co.uk/politics/2011/mar/25/voters-cuts-coalition-poll

The poll puts the Conservatives back into a narrow lead, although movement between the parties is within the margin of error. Tory support is 37%, up two, and Labour is 36%, down two. The Lib Dems are on 16%, down two on the last ICM poll. Other parties score 11%, up two, including the Greens on 2%.

Tories like the coalition: giving it a net positive of 71 points. Labour voters do not: a net negative of -56. Lib Dem opinion is mixed. Among current Lib Dems the coalition has a positive of 26 but among all people who backed the party in 2010 it is -9.

Coalition leaders are becoming more unpopular too. Cameron continues to be an asset to his party with a net positive rating among all voters of +5. But more people now think George Osborne is doing a bad job than a good one: a net rating of -2. Nick Clegg trails in with a net of -18.

Ed Miliband is also much more unpopular than Osborne, with a negative of -13. Among people who voted Labour in 2005 50% think he is doing a good job; among current Labour voters 58%.

 

[Dark Machine]

New ICM/Guardian VI poll out.

37/36/16/11 Con lead +1.

Well the Tory/Bank spin machine is doing well, it should considering how much they've paid for it. Thousands in London today beg to differ with the poll of course.

 

[louis89]

Very surprised and pleased with those polls, especially the second one. We really have entered into a period of public awareness of the importance of having sensible budgets; the first thing people ask now whenever something new's announced is "how much is it going to cost?" That is a very good thing. I don't want another government like the last one.

 

[Wes]

They're going to scrap the 50p tax rate for high earners.

How exactly is that "fair"?

 

[Chinner]

.

 

[zomgbbqftw]

They're going to scrap the 50p tax rate for high earners.

How exactly is that "fair"?

It doesn't make any money. All it serves to do is drive away business and entrepreneurs to the East or the US. Without these people private sector job creation will be lower.

Also the top rate of tax for a country usually signals how open for business it is, the 40% rate was pretty decent, and for a lot of people I know the 50% rate just made them avoid paying tax altogether or they moved their residency off-shore and now they pay just £20k in non-dom fees vs £100k in regular income tax at the 40% rate.

For every pound you gain from top rate payers you lose a pound elsewhere and once you add in the knock on effect you end up losing more than that.

I was in the 50% tax band last year, I paid a lot more in tax as matter of principle, but for every person like me in the city, there are loads that set up off-shore funds and move their residency to Zug in Switzerland (and the bank will pay them in Swiss Francs into their account in Zug Kantonalbank). Sucks, I know, but that is the reality of the situation.

 

[blazinglord]

They're going to scrap the 50p tax rate for high earners.

How exactly is that "fair"?

Just to play the devil's advocate here, why is it 'fair' that higher-earners have to pay for a far higher share for public services they on a whole use less of, if at all, than those on lower-income? I think 40% struck the right balance (although it could be lower). 50% is just gesture politics geared at placating the envious. People should remember that taxation is a contribution to wider society, it isn't (or shouldn't be) a penalty for being rich.

 

[Mr. Sam]

it isn't. do people actually believe that the coalition government is working under the pretense of being 'fair'?

Not to be a pedant, but...

Pretense:

• the act of giving a false appearance; "his conformity was only pretending"
• pretending with intention to deceive

So yes; I do believe they're operating under that pretense.

 

[Chinner]

.

 

[Mr. Sam]

Just was wondering if that was your implication.