Where I think TTA have gone wrong...

[leeslover]

I see, thanks for explaining.

 

So hypothetically what happens to countries if they go bankrupt yet those they owe money to want it back, would the only way to achieve this be through something like a military invasion to take resources?

That's sort of the position a lot of the poorer countries are in, hence the campaigns by some charities to reduce or write off Third World debt for those who are never going to be able to service it let alone pay it back without starving themselves in the process. The Western governments are very cheeky in how they present this, for example the headline, "Gordon Brown writes of £10 billion of debt," will often mean he's spent a few million, as the debt is not worth anything like it's face value. As a country like Mozambique for example is never going to pay much of it, the people who they owe it to will often sell the debts on the money markets for a few pence or less in the pound.

[Stitch_KTF]

The UK government has a decent economy and a good credit rating. This means it can sell bonds and securities to businesses, pension funds, other countries etc as they are seen as sound investments where they will get there money back. If they were to write off these debts, businesses and pension funds would fail, the credit rating would be worthless and our ability to easily manage debt would go down the pan as no one would buy bonds/securities in the future.

 

So the governments don't owe central banks then?

 

 

 

No, currencies are inherrently worthless, its all based on trust. This is called the money illusion. We used to use the gold standard which is where a certain amount of money is worth so much gold, but if anything went wrong, people would hoard the gold. The current system is based on Fiat Money, where money only acheives value as a government demands it in payment of taxes.

 

Well put.

[wozz_oafc]

Can anyone recommend a good book to read in order to understand world economics better? Its something I find very interesting as its basically explains what goes on in the world, I wouldnt know where to start though!

[Stitch_KTF]

Can anyone recommend a good book to read in order to understand world economics better? Its something I find very interesting as its basically explains what goes on in the world, I wouldnt know where to start though!

 

I think a recommendation would be a matter of opinion/stance. Read a few....

 

I'm awaiting Peter Schiff's book in the post.

[slurms mckenzie]

True enough - I'd go as far as to say no-one could possibly know the absolute "true" figures, it's just too complicated a calculation. Even the Treasury figures are just an estimate.

 

My opinion is that Gordon Brown had already spent a decade storing up and hiding "invisible" debt for the next generation even before everything went t*ts up, which is the main reason I now tend to think the real picture is actually worse than the Treasury are letting on.

 

Labour will be decimated at the next election. And I do not see them regaining credibility (let alone power) for some considerable time.

 

You really think that that Blair mk2 minus charisma, character and policies and his band of Eton public schoolboys would have done any better? If the Conservative laissez-faire market philosophy would have prevailed, there would have been total collapse in the UK followed by the World's economies. Hopefully, the voting public will look beyond the sh1t published in the Sun et all and avoid the Tories at all costs.

[OldhamSheridan]

You really think that that Blair mk2 minus charisma, character and policies and his band of Eton public schoolboys would have done any better? If the Conservative laissez-faire market philosophy would have prevailed, there would have been total collapse in the UK followed by the World's economies. Hopefully, the voting public will look beyond the sh1t published in the Sun et all and avoid the Tories at all costs.

 

Just the odd thing. Lack of policies? I'd say telling large portions of the public sector they are going to be at best poor is a policy and a half. Might not agree with it, but it certainly makes a statement.

 

Labour have done their time, and it always runs out with landslides at around this time (12 years-ish). Sadly they've made a complete mess of things. They've lied, spent foolishly and practically ruined the country. You can say as much as you like the Tories/Libs would have done the same thing. But that is irrelevant. it happened on labours very long watch and they must bear the brunt of the criticism.

 

As for The Sun. Well they just back a winning horse. Whatever sells papers. But it is as good as sewn up by the Conservatives and has been for a long while now.

[otid]

Can anyone recommend a good book to read in order to understand world economics better? Its something I find very interesting as its basically explains what goes on in the world, I wouldnt know where to start though!

 

I wouldn't wish to come across in any way condescending, so please don't think i'm taking a cheap shot....but if you seriously have little in the way of understanding of world economics....and seriously wish to gain a broad based simplification of the subject then 'Economics for Dummies' is not a bad place to start.

[jimsleftfoot]

So the governments don't owe central banks then?

 

 

I don't think so. The BofE is a central bank but they just look after the governments money. They set interest rates and monitor inflation and can manipulate currency but they can't lend the government money as their reserves are the countries reserves. There are other central banks (IMF, EU Central Bank etc) who do lend money but they tend to lend it to countries who cannot sell bonds as they have a rubbish credit rating.

[Corporal_Jones]

Also, Corporal, wont a return to the dark ages be avoided simply by the power of population and their massive productivity? Surely monetary reform would preferable to a life-time of 'slavery'?

 

 

A return to a markedly lower standard of living seems to be more likely than a return to the dark ages, at least until we run out of the resources to sustain any 'massive productivity.' You can't make things from when you run out of the materials to make them from, and lack the energy with which to operate the means to make them. And you can't invent new resources, only alter them. All that we have on earth is already here.

 

It also seems unlikely that moneary reform would overcome the basic problem of deindustrialisation and our transformation into a low wage economy.

 

[leeslover]

A return to a markedly lower standard of living seems to be more likely than a return to the dark ages, at least until we run out of the resources to sustain any 'massive productivity.' You can't make things from when you run out of the materials to make them from, and lack the energy with which to operate the means to make them. And you can't invent new resources, only alter them. All that we have on earth is already here.

 

It also seems unlikely that moneary reform would overcome the basic problem of deindustrialisation and our transformation into a low wage economy.

We aren't running out of resources. Most natural materials are less scarce than they were decades ago.

[Corporal_Jones]

Can anyone recommend a good book to read in order to understand world economics better? Its something I find very interesting as its basically explains what goes on in the world, I wouldnt know where to start though!

 

 

 

To understand the Blair and Brown years and the roots of how we got into this mess, try Fantasy Island by Larry Elliott and Dan Atkinson.

 

John Gray's False Dawn is also an excellent contribution, written by a former adviser to Thatcher.

[Corporal_Jones]

We aren't running out of resources. Most natural materials are less scarce than they were decades ago.

 

 

 

I'm not saying that we're running out now, but that we will as the world's population continues to rise towards the 8-10 billion mark that's projected by most of those that study such matters, and as new industrial powers rise, demanding a vastly increased share.

 

Meanwhile, while there may be new discoveries of certain natural resources, it's physically impossible to increase natural resources that are constantly in demand and in use. As with oil, in the end it becomes more costly to extract resources than to use them.

[rudemedic]

We aren't running out of resources. Most natural materials are less scarce than they were decades ago.

 

Enitrely agree and I would add that things like Coal of which we still have in abundance isn't currently profitable to mine so no-one does it. However in the next 50 years that situation could well change and British (or possibly more precise Welsh) Coal is the best coal in the world for making steel due to its mineral compostion.

 

We could also legitimately extend our claim for terrestrial waters to the maximum level meaning that certain Oil/ gas fields in the North Sea instead of being in international waters are in British waters.

[Stitch_KTF]

Enitrely agree and I would add that things like Coal of which we still have in abundance isn't currently profitable to mine so no-one does it. However in the next 50 years that situation could well change and British (or possibly more precise Welsh) Coal is the best coal in the world for making steel due to its mineral compostion.

 

We could also legitimately extend our claim for terrestrial waters to the maximum level meaning that certain Oil/ gas fields in the North Sea instead of being in international waters are in British waters.

 

It's comforting to know that we have opportunity to look after ourselves with little regard for others or the environment.

[Corporal_Jones]

Enitrely agree and I would add that things like Coal of which we still have in abundance isn't currently profitable to mine so no-one does it. However in the next 50 years that situation could well change and British (or possibly more precise Welsh) Coal is the best coal in the world for making steel due to its mineral compostion.

 

We could also legitimately extend our claim for terrestrial waters to the maximum level meaning that certain Oil/ gas fields in the North Sea instead of being in international waters are in British waters.

 

 

 

Perhaps you're right with regard to coal. The problem is that coal doesn't have the scope of oil, and that, because immensely complicated, it's unbelievably costly to transfer from one energy source as a primary source to another, and despite the fact that the many and politically variable people who study the matter, say that the indications are that the demand for oil will start to outstrip supply before very time consuming task this can be performed. It also takes no account of the many vested interests who seek to impede the process. And finally, it's supposed that the money will be there for such costly transfers when we're told that the current levels of debt that most industrial nations are mired in will take a generation to pay off.

 

Yor second idea is a non-starter anyway-why would other powers allow it- but out of interest, which oil fields are you talking about?

Edited October 22, 2009 by Corporal_Jones

[Corporal_Jones]

And by the way-natural resources will not go on being discovered forever. You can only extract from the earth what's already here. Resources can, assuming there's a political will, and a preparedness on the part of society as a whole, to do so, be used more efficiently, but they will eventually run out as demand increases.(And increased efficiency usually increases demand for a resource, and thus speeds up use rate-this is called Jevon's Paradox if I remember correctly.) Or, more accurately, they become, as seems to be the case with oil, increasingly costly to extract until economically unviable.

Edited October 22, 2009 by Corporal_Jones

[leeslover]

Perhaps you're right with regard to coal. The problem is that coal doesn't have the scope of oil, and that, because immensely complicated, it's unbelievably costly to transfer from one energy source as a primary source to another, and despite the fact that the many and politically variable people who study the matter, say that the indications are that the demand for oil will start to outstrip supply before very time consuming task this can be performed. It also takes no account of the many vested interests who seek to impede the process. And finally, it's supposed that the money will be there for such costly transfers when we're told that the current levels of debt that most industrial nations are mired in will take a generation to pay off.

 

Yor second idea is a non-starter anyway-why would other powers allow it- but out of interest, which oil fields are you talking about?

Have a look at this - it shows that apart from the sharp rise caused by OPEC action in the 1970s and a less dramatic rise due to the recent kerfuffle in Iraq the real price of oil (the red line) has been remarkably stable over the last 50 years. This shows that it is no scarcer now than it ever was, and that political actions are unable to permanently over-ride the effects of supply and demand – even when OPEC controlled a large majority of oil production they couldn’t maintain a higher price in the medium-long term.

[OldhamSheridan]

And by the way-natural resources will not go on being discovered forever. You can only extract from the earth what's already here. Resources can, assuming there's a political will, and a preparedness on the part of society as a whole, to do so, be used more efficiently, but they will eventually run out as demand increases.(And increased efficiency usually increases demand for a resource, and thus speeds up use rate-this is called Jevon's Paradox if I remember correctly.) Or, more accurately, they become, as seems to be the case with oil, increasingly costly to extract until economically unviable.

 

Bah, new resources are coming out of the ground all the time:

 

http://www.npr.org/blogs/thetwo-way/2009/1...arcasses_t.html

[Stitch_KTF]

Bah, new resources are coming out of the ground all the time:

 

http://www.npr.org/blogs/thetwo-way/2009/1...arcasses_t.html

 

 

I dread to think what the numpties who campaign against wind turbines would say.

Edited October 22, 2009 by Stitch_KTF

[leeslover]

 

I dread to think what the numpties who campaign against wind turbines would say.

Makes you think though, there's 8 million dogs in the UK...

[Corporal_Jones]

Have a look at this - it shows that apart from the sharp rise caused by OPEC action in the 1970s and a less dramatic rise due to the recent kerfuffle in Iraq the real price of oil (the red line) has been remarkably stable over the last 50 years. This shows that it is no scarcer now than it ever was, and that political actions are unable to permanently over-ride the effects of supply and demand – even when OPEC controlled a large majority of oil production they couldn’t maintain a higher price in the medium-long term.

 

 

 

For every set of figures that 'prove' one thing, however, there's another that proves something different. I'm looking at the long-term. The actions of OPEC et al are only one part of a much broader picture.

 

This above data fails to take into account the way that production has been flat (suggesting that the impact of the, in historical terms scarce, new discoveries has been minimal) since 2004, which seems to be the reason for the wildly fluctuating prices in recent years (I don't recall anybody claiming that the high price of summer 2008 wasn't a problem because the real price remains stable-there's a difference in the here-and-now between paying $130 per barrel and, say, half that amount, however you try to manipulate the statistics.) Prices fell drastically with the economic crash and are slowly climbing back up. Nobody is able to predict how far they'll rise and when they'll fall again. These fluctuations are a symptom of an oncoming peak in supply-or one that's already been reached. While new oil fields are still being discovered, the rate has dropped over recent decades, and, as with the recent discovery, they are almost immediately declared to be disappointing and not an answer even to the needs of the existing industrial nations, let alone the vastly populated rising industrial powers. Why else is all the talk in the oil industry about trying to exploit tar sands and other hard-to-obtain sources of oil?

 

Discovery of oil in the US, for example, peaked in 1930, and US production around forty years later. Ours more recently. Why did the precarious relationship between the West and the Middle East develop if not to prepare for the exhaustion of this finite resource at home, and in less politically hostile regions? What was primarily behind the West's decision to establish the state of Israel and the recent war in Iraq, if not to establish at first a police station in the region and then a direct military presence? Why the concern that supplies elsewhere (Russia, Venezuela etc) lie in places which aren't exactly on the best of terms with the US and the West generally?

 

You could go on. Yet even if you reject all this (although I thought ultra-right libertarians like yourself-in common with your Marxist 'enemies'- placed economic motives at the centre of everything), the fact remains that, new discoveries or not, oil will be economically unviable before supplies run out-every oil well and every field eventually becomes too costly to continue extracting the stuff as the easier to obtain oil is used up. New technology usually helps, but that technology depends for its construction and use on...oil.

Edited October 22, 2009 by Corporal_Jones

[leeslover]

You could go on. Yet even if you reject all this (although I thought ultra-right libertarians like yourself-in common with your Marxist 'enemies'- placed economic motives at the centre of everything), the fact remains that, new discoveries or not, oil will be economically unviable before supplies run out-every oil well and every field eventually becomes too costly to continue extracting the stuff as the easier to obtain oil is used up. New technology usually helps, but that technology depends for its construction and use on...oil.

 

I’m not Marxistist, some of my best friends are Marxists... Anyway, saying that economic motives are at the heart of anything completely misunderstands both the system of voluntary exchange and broader human action.

 

Back to oil – the recent above trend prices were caused by fears over the short and medium term due to political instability rather than longer term supply and demand. This is clearly true as the prices wouldn’t have fallen so far when as you say demand dropped with the current downturn. Of course, if we carry on using oil at the same or increasing rate the price will go up and up and up until what’s left of it in the ground is worth extracting even though it’s hideously expensive. But there’s the answer – as things become hideously expensive, you stop using them. There’s no need to run cars on petrol right now, the reason we do is that petrol (despite most of the cost being tax, so again not linked to scarcity)is that petrol is relatively cheap – ie it isn’t scarce. Bio-fuels and in time I suspect battery and hydrogen powered cars will become the norm as better uses can be made for oil (of course you still need to get the energy to power the batteries or make the hydrogen, which people often forget). It may actually be the case that these technologies will undercut petrol before a physical shortage of oil causes it to be economically scarce, just as whale oil went from being a valuable commodity for it’s use as lamp oil to being relatively redundant as it was superceded by gas and electricity.

 

[ghostofcecere]

Can anyone recommend a good book to read in order to understand world economics better? Its something I find very interesting as its basically explains what goes on in the world, I wouldnt know where to start though!

"A Beginners Guide to the World Economy" by Randy Charles Epping (stop sniggering at the back!) is a good place to start. A little out of date now perhaps but will give you the principles you need to put into the modern context of the credit crunch and our national debt.

 

[jimsleftfoot]

 

I personally think nuclear power will ironically be the saviour!!

[ghostofcecere]

You really think that that Blair mk2 minus charisma, character and policies and his band of Eton public schoolboys would have done any better? If the Conservative laissez-faire market philosophy would have prevailed, there would have been total collapse in the UK followed by the World's economies. Hopefully, the voting public will look beyond the sh1t published in the Sun et all and avoid the Tories at all costs.

Spot on Slurms......... my big problem with the Tories is, and always will be that out of all the parties they are the ones who want to run the country purely for what they can get out of it!! How can a man with a £30M personal fortune possibly know what life is like for the ordinary working families of the UK.