What happened to the markets today?

[Barrichello]

I can totally understand the general German public anger putting pressure on Merkel regarding the bail out for the Greeks when they compare like for like pension system......

Greece Germany
Years of work to earn full pension: 35 45
Proportion of wages as pension: 80 % 46 %
Number of pension payments a year: 14 x 12 x
Pension increase 2004: 3 % 0 %
Pension increase 2005: 4 % 0 %
Pension increase 2006**: 4 % 0 %
Minimum payment (Euros): 445 ca. 600
Maximum payment (Euros): 2538 ca. 2100
Minimum pension age for men: 65 65–67
Minimum pension age for women: 60 65–67
Average pension entrance age: 62,4 63,2

"Pension cuts? Not for me!" Retired postal worker Marika Elleni (85) receives €3,500 a month.

Interesting and enlightening article on "Business as usual in Greece"........

http://www.bild.de/BILD/news/bild-en...in-greece.html

[GheeTsar]

Of course, the other option is to stand, but I know the amount of work required to run an election campaign and hold down a full time job: it knackered me almost to the point of quitting my job last time I tried it, and I don't have that luxury this time. Besides, I wouldn't want to stand without a reasoned set of policies to back me up (first and foremost being the massive devolution of power to regional and local government), and I'd have to discuss it with the better half too, as standing in an election has a massive impact on your family...

Or you could run as one of the "None of the above" candidates that promise to hold a bye-election to pick again if they get in.

[scaryjim]

Or you could run as one of the "None of the above" candidates that promise to hold a bye-election to pick again if they get in.

I could if I wanted to waste my own time and money, the Councils (therefore the taxpayers) money, and achieve nothing beyond 15 minutes of fame for being a PITA.

I'd rather stand on a policy-based campaign - for all I'm not voting this time I do take governance and democracy seriously...

[TooNice]

I hope Gordon Brown is paying attention, and I hope anyone who has ever voted Labour watches closely to what happens to a country which has spent more than it can afford.

You know right now looking at certain indicators, we are following the Greek trend from a decade ago :'(

This makes me a very sad panda.

We must massively cut public spending, and accept we can't afford to live our lives in this luxury on 'credit'.

I have tons of questions, and it seems the more I read, the more confused I am getting. So, I apologise for the lack of coherence.

Greece:
1. Does Greece have a similar structure to the UK in terms of public services?

2. What would it take for the Gilt to be downgraded?

3. May as well ask, are those indicators anything you can talk about?

Regarding the graph:
3. First definitions: I take it that public sector debt refer to government debt. Would domestic private debt refer to the ones owned by the individuals? e.g. Credit cards, loans and mortgage?

4. It says here (http://news.bbc.co.uk/1/hi/business/8636701.stm) that government debt is now 62% of GDP. Numbers here (http://www.ukpublicspending.co.uk/do...ent%20Of%20GDP) are significantly different. I am confused..

5. What does it really mean anyway? Let's say the government debt is about 62% of the GDP in the UK. Italy's government debt per GDP is about twice that. According to the graph, the combined private and domestic debt is 470% vs 315% (ish). Who is in a more troubled situation?

Political policies:
6. Having read my share of posts in the past weeks/months, I got to read repeatedly about some of blunders Brown is blamed on. For instance selling gold on low. What I never bothered asking so far is why (I had little interest in politics and economics 10 years ago)? Was the government somehow in urgent need of cash at the time? Was issuing additional gilts not possible at the time? Or is it as simple as a terrible call?

7. I am quite sure that more than one person has mentioned that Labour has kept borrowing and spending in the 'good years' and that's was attributed as being one of the reason the UK lagged behind other major economy in recovery. They did not, so what 'luxury' did the government buy on credit (using TheAnimus's quote)? Are people saying that too much was spent on health/welfare/education? The war? Various bailout? Basically when did it start going wrong?

8. Speaking of recovery, is there a consensus on the whether the money Labour spent to bring us out of recession (£15B wasn't it? the majority which went for the VAT cut) turned out to be 'well spent'? Basically, was it the best out of a bad situation or a huge cost that brought limited benefit?

Comments (from anyone - my questions go beyond the scope of the quoted posts) much appreciated (or even links to previous thread where it's already been discussed).

[kalniel]

I have tons of questions, and it seems the more I read, the more confused I am getting. So, I apologise for the lack of coherence.

Greece:
1. Does Greece have a similar structure to the UK in terms of public services?

Public services usually follow a similar structure, however that's not the issue - the problem with Greece's public services is they are vastly over paid. In the UK public sector is under-paid compared to private sector, but in Greece they are paid 14 months for 12 months work, they retire really early, other people continue to collect pensions after the pensioner has died etc. etc. See Barrichello's post a few up. Not to mention the widespread tax evasion problem they have.

2. What would it take for the Gilt to be downgraded?

UK gilts? Well the interest rate on them will go UP if investors consider them risky, ie that the UK govt would be more likely to default on them than pay them back. There's no sign that anyone believes that would be the case so it doesn't look like it will happen. However I guess there are two scenarios which might cause worry - 1) if we have a govt. that is really averse to raising taxes and xenophobic enough to basically screw other countries for UK's own gain. While there are some elements of the Tories that are like that I think they are currently moderate enough to avoid that. Hopefully. 2) if we have a govt creates so much unemployment/increases the trade deficit so much that it doesn't get enough taxes in to avoid bankruptcy. This is the worry that some have with the Labour party, though again I think it's a needless worry, but just as you'll have some people at one extreme worried about #1, you have their opposites worried about #2. Both labour and the conservatives have received backing from eminent economists for their points of view.

Regarding the graph:
3. First definitions: I take it that public sector debt refer to government debt. Would domestic private debt refer to the ones owned by the individuals? e.g. Credit cards, loans and mortgage?

Yup.

4. It says here (http://news.bbc.co.uk/1/hi/business/8636701.stm) that government debt is now 62% of GDP. Numbers here (http://www.ukpublicspending.co.uk/do...ent%20Of%20GDP) are significantly different. I am confused..

Not sure about the second link to be honest - I know our debt figures did come in slightly lower than estimated by the chancellor, but not that much lower.

5. What does it really mean anyway? Let's say the government debt is about 62% of the GDP in the UK. Italy's government debt per GDP is about twice that. According to the graph, the combined private and domestic debt is 470% vs 315% (ish). Who is in a more troubled situation?

The Italy government. Most private debt in this country is secured against assets worth more than that debt. We're in trouble if the value of those assets plummets, hence why everyone is so keen to keep housing unaffordable But it should be able to be carefully managed.

Political policies:
6. Having read my share of posts in the past weeks/months, I got to read repeatedly about some of blunders Brown is blamed on. For instance selling gold on low. What I never bothered asking so far is why (I had little interest in politics and economics 10 years ago)? Was the government somehow in urgent need of cash at the time? Was issuing additional gilts not possible at the time? Or is it as simple as a terrible call?

It was done with the right intentions, but too clumsily managed to be most effective. The idea was to reduce Britain's long term debt - to do that you need big payments which make very little difference to short term wealth but which are value for money in the longer term. With hindsight it wasn't a good time to sell, especially as plans were too slowly implemented, however if the value of gold hadn't risen then it would have been a very prudent move.

7. I am quite sure that more than one person has mentioned that Labour has kept borrowing and spending in the 'good years' and that's was attributed as being one of the reason the UK lagged behind other major economy in recovery. They did not, so what 'luxury' did the government buy on credit (using TheAnimus's quote)? Are people saying that too much was spent on health/welfare/education? The war? Various bailout? Basically when did it start going wrong?

The government borrowing was actually seen as very prudent by other nations - effectively they only borrowed over a certain point to invest and/or reduce debt made on worse terms, ie it was to increase the wealth of the country in the long term. Various public sector reforms also cost a lot of money, as they had been left in a terrible state by the Tories. The results were very good though - for all the moaning about the NHS, it has markedly improved.

8. Speaking of recovery, is there a consensus on the whether the money Labour spent to bring us out of recession (£15B wasn't it? the majority which went for the VAT cut) turned out to be 'well spent'? Basically, was it the best out of a bad situation or a huge cost that brought limited benefit?

Opinion is split. Lots of world eminent economists think it was handled the best it possibly could have been - some even saying that GB actually had a majorly positive effect on ending the world-wide recession. Others disagree. So there's no consensus, unless you engage in 'my letter of support is from more eminent economists than yours'.

[TheAnimus]

1) Having a very hard time googling public data for that! Best I've found so far is someone from Brunel in 2000.....

Its also quite hard to get accurate public expenditure for us because of all those fricken PPI schemes which where designed to be hard to account for , as such I think the only safe thing to do is assume the worst as they obviously have something to hide.

So yes, we have a MUCH larger GDP but if it was shocked back down, to levels 10 years ago, like we could well see in a double dip, we would have a worse expenditure ratio than Greece very easily. But that is pure speculation.

So in fairness, 1 is based on pure speculation rather than any solid figures, but some of the analysts reports I've access to show it too.

2) Well not at the moment, but the fear of a hung parliament, combined with people like a certain influential west coaster have made people question if we will be AA this time next year. This could well lead people to further question our non debt obligations such as the PPI.... Fricken brown.

3) Bespoke systems are all I do, I'm not qualified or experienced enough to comment on the interpretation of any of them (plus i'd be in trouble if I did!). I'm just a glorified data monkey.

4) Depends on who you ask, but the trend is that they are all quite high, its not just the borrowing but the defecit, we are low on natural resources, at the moment the north sea has been propping up a lot, that is going to dwindle. Either way its a number that is too large, and we need to start cutting quite deeply, even the least worrying estimates show this. Debt is more than just gilts see: http://www.dmo.gov.uk/ I think they have a breakdown somewhere publicly!

5) The problem that Greece faces is pretty much the same as a run on the bank, people get spooked. Look at the US deficit, people are calm about that (thou McDonalds did have a better CDS ('insurance' against bankruptcy) than the US at one point the other year ). So long as people think we will pull through, we can borrow, it is just a risk after all, not a certainty. It is that risk I object too.

[TheAnimus]

6) he thought it would make money over the long term, he was keen to overhaul the old system, by having a pound that was backed by the economy it would gain value as the economy did, this would allow for cheaper borrowing, and in effect let someone gamble with money that was just sitting there safe as gold.

7) Schools, Nurses, Sunshine, Lollypops, Rainbows, Iraqi's slain... They all cost. Meanwhile he didn't have the integrity to pay for it up front, instead he wanted to let that be someone elses problem. But as most labour voters still blame all the pain of spending cuts and tax rises on Thatcher, not the insanity beforehand, well looks like he might get away with it again:
http://www.guardian.co.uk/business/2...lection-victor
(its not just me who thinks this way!)

8) Hmm, well you could always say that from hindsight I can say that the VAT cut was ineffectual, but when you consider we came out of recession last compared to our 'competition', something was obviously done wrong. Even the Germans took the piss out of the VAT cut at the time, personally I think VAT is a more ethically acceptable tax as it should only be on luxuries. Given that we're a net importer of the majority of goods, the £v$ effects those more, that leaves services. Now the most expensive meal I've had in the last month, been a gent my bill was for two, a saving of £5.... Is that going to make me tip more? Its certainly not going to enter into my head when planning for such expenditure is it?

I just can't see how anyone would think that would help the economy grow. I would love to know how they thought it would.

If I *had* to spend 15bn, I would give a holiday to all companies that are say more than 2 years old, employing fewer than 20 staff, 5 of whom must be full time or something, and give them an NI holiday on a new employee. Obviously those numbers are made up because I've no idea how many staff it would have to be, no idea of demand etc...... But something like that imho would have made a real difference to people, provided more jobs, and hopefully cost less because some people would have left JSA.

[Barrichello]

Got cnbc on showing report of 3 people who have died in Greece during the on going protests today

[Barrichello]

ha damn - something just spooked the markets. Worst intraday day drop since Lehmans.

Was just watching some guys commenting on "Greek Crisis on verge of going Global" and the Dow dropped 12% (now coming back)


http://www.google.co.uk/finance?q=INDEXDJX:.DJI

edit: haha FT saying it looks like a fat finger or technical screw up - im not so sure though http://ftalphaville.ft.com/blog/2010...em-on-wall-st/

Glad im not at work today.

[TheAnimus]

Ah the 2:45 event, Looking at Accenture, it couldn't happen to a nicer company, now labour are in less power, they are less likely to get paid billions to feck up a simple project

[oolon]

Thats got to have burnt a lot of people stops, I heard (on radio 4 today) someone had 1000 pp on the dow and made 350k!

[scaryjim]

Possibly something to do with this little typo?

[kalniel]

Thats got to have burnt a lot of people stops, I heard (on radio 4 today) someone had 1000 pp on the dow and made 350k!

Lucky if it sticks

Nasdaq Operations said it will cancel all trades executed between 2:40 p.m. to 3 p.m. showing a rise or fall of more than 60 percent from the last trade in that security at 2:40 p.m or immediately prior.