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The Tories find the Magic Money Tree

including Budgets
GoSeigen
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The Tories find the Magic Money Tree

#176962

Postby GoSeigen » October 29th, 2018, 7:44 pm

I think they should tell us where it was.



This, we are to believe, is "prudent" management of the government finances:

2010: "The UK has borrowed too much. The UK is bankrupt. There is no magic money tree. We must implement austerity immediately."

2010-2018: Tory Chancellors borrow another £700bn, almost doubling the debt of the "bankrupt" UK govt. £50,000pa tax cut for millionaires, austerity for everyone else.

2018: Miracle! The magic money tree has been found! Party time for everyone. Government debt doesn't matter any more.


GS

Dod101
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Re: The Tories find the Magic Money Tree

#176968

Postby Dod101 » October 29th, 2018, 7:53 pm

Well I don't know about a magic money tree but we have all apparently been suffering austerity for the last decade or so. Really? I can't say I have noticed but then I have been retired for that entire period. Does that mean that we are really the privileged lot that some say we retirees are? Ignore the State Pension which I do not regard as income. I just stick it in a savings account and use it for (totally discretionary) overseas travel.

We who are living off our investments, (our dividends in fact I guess in most cases), have done well over the last decade but we must not shout about that. Did anything change in the dividend tax today?

I find myself completely underwhelmed by the Budget and just get on with my life.

Dod

tjh290633
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Re: The Tories find the Magic Money Tree

#176995

Postby tjh290633 » October 29th, 2018, 9:33 pm

GoSeigen wrote:I think they should tell us where it was.



This, we are to believe, is "prudent" management of the government finances:

2010: "The UK has borrowed too much. The UK is bankrupt. There is no magic money tree. We must implement austerity immediately."

2010-2018: Tory Chancellors borrow another £700bn, almost doubling the debt of the "bankrupt" UK govt. £50,000pa tax cut for millionaires, austerity for everyone else.

2018: Miracle! The magic money tree has been found! Party time for everyone. Government debt doesn't matter any more.


GS

If you recall, Labour spent so much that there was an enormous deficit in the annual budget, and the National Debt was rising exponentially. That is why austerity had to be adopted, and we still do not have a surplus on the Budget. Until we do, the National Debt will continue to increase, albeit more slowly that when Labour was ousted.

Don't forget the Laffer effect, when reduced taxes lead to higher tax receipts.

Money trees have nothing to do with it. Just sound economics.

TJH

Nimrod103
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Re: The Tories find the Magic Money Tree

#177032

Postby Nimrod103 » October 30th, 2018, 8:11 am

That the deficit has come down so impressively seems to have surprised all the pundits. I'm not sure why, because AIUI it must be due to all the extra tax income Phil has raised from things like abolishing dividend tax credits in the last couple of budgets. So people with investment income outside ISAs have been stung, ie all the well off and anyone with a private pension.

Going forward, Phil is giving some of that money back by running the deficit back up in future years, by giving that money back out to everyone (not just the well off) as an income tax cut. As usual a case of bribing the electorate with their own and somebody else's money. Sustainable in the long term? - probably not, but it is an electioneering budget, just in case there has to be a snap election in the near future.

GoSeigen
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Re: The Tories find the Magic Money Tree

#177057

Postby GoSeigen » October 30th, 2018, 9:51 am

tjh290633 wrote:
GoSeigen wrote:I think they should tell us where it was.



This, we are to believe, is "prudent" management of the government finances:

2010: "The UK has borrowed too much. The UK is bankrupt. There is no magic money tree. We must implement austerity immediately."

2010-2018: Tory Chancellors borrow another £700bn, almost doubling the debt of the "bankrupt" UK govt. £50,000pa tax cut for millionaires, austerity for everyone else.

2018: Miracle! The magic money tree has been found! Party time for everyone. Government debt doesn't matter any more.


GS

If you recall, Labour spent so much that there was an enormous deficit in the annual budget, and the National Debt was rising exponentially. That is why austerity had to be adopted, and we still do not have a surplus on the Budget. Until we do, the National Debt will continue to increase, albeit more slowly that when Labour was ousted.

Don't forget the Laffer effect, when reduced taxes lead to higher tax receipts.

Money trees have nothing to do with it. Just sound economics.

TJH

My recollection is different; the above is plain factually wrong, and I am aware of the poster's view that [roughly speaking] the capital value of an issued security is immaterial. The wider public is also hugely ignorant of debt and deficit issues, as evident on R4 this morning.


The OP was highlighting the hypocrisy and incompetence of present and previous governments' positions, based on their own logic, not mine. The "magic money tree" is highly relevant as that is how May herself IIRC and the pro-austerity caucus (for lack of a better description) verbally abused people who were as chilled some years ago about a low and manageable National Debt as the current govt is now, having massively increased that debt during their time in office.

While those guys were squealing about exponentially rising debt others took a huge investment position in gilts -- which was absolutely the correct thing to do in hindsight, long gilt yields falling from 5% to 1.5%. If only post-2010 governments had had equal confidence in this country rather than the arrogant self-interest which has predictably led us to the disaster of the Brexit process and has left FTSE share prices barely 25% higher than 7.5 years ago -- compared to >100% growth of SPX under Obama's more enlightened management.


GS

Dod101
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Re: The Tories find the Magic Money Tree

#177066

Postby Dod101 » October 30th, 2018, 10:11 am

As I recall it Obama's management was basically do nothing or think so long about it that by the time a solution is decided upon the problem has gone away. A good philosophy I'd say.

The interesting thing about the FTSE is that whilst it has done very little in the last 7.5 years it has done very little in the last 18 years, currently 7026 v 6950 at 31 December 1999 (or thereabouts anyway; not certain of the exact numbers) It would be interesting if someone could be bothered to do an analysis as to why that is.

Dod

Alaric
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Re: The Tories find the Magic Money Tree

#177074

Postby Alaric » October 30th, 2018, 10:29 am

Dod101 wrote:currently 7026 v 6950 at 31 December 1999 (or thereabouts anyway; not certain of the exact numbers)


In retrospect, 6950 was the peak of artificially high valuations of tech stocks.

But perhaps it would be interesting to look at the performance of a total return index, or even its proxy a FTSE 100 accumulation Tracker to see how such an investment would compare to RPI, CPI, alternative investment choices or even cash.

tjh290633
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Re: The Tories find the Magic Money Tree

#177076

Postby tjh290633 » October 30th, 2018, 10:40 am

GoSeigen wrote: If only post-2010 governments had had equal confidence in this country rather than the arrogant self-interest which has predictably led us to the disaster of the Brexit process and has left FTSE share prices barely 25% higher than 7.5 years ago -- compared to >100% growth of SPX under Obama's more enlightened management.


GS

The Index may be down, but individual share prices show different results. These are the ones I still hold from 31 Dec 2007:

AstraZeneca on 31 dec 2007 was £21.64, last night £58.62, up
BAE Systems was £4.98, last night £5.22, up
BP was £6.15, last night £5.35, down
BT was £2.73, last night £2.38, down
Compass was £3.08, last night £15.46, up
DS Smith was £2.09, last night £3.77, up
Imperial Tobacco was £27.12, last night £26.86, little changed
Kingfisher was £1.45, last night £2.48, up
Lloyds TSB was £4.72, last night £0.57, down
M&S was £5.70, last night £2.97, down
National Grid was £8.34, last night £8.44, little changed
Shell B was £20.90, last night £24.69, up
Segro was £4.70, last night £6.22, up
Tesco was £4.77, last night £2,12, down
Tate was £4.45, last night £6,71, up
Taylor Wimpey was £2,03, last night £1.55, down
United Utilities was £7.56, last night £7.33, little changed
Vodafone was £1.88, lat night £1.47, down

It's not uniform. I'm actually almost double in portfolio value since then.

TJH

Ashfordian
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Re: The Tories find the Magic Money Tree

#177103

Postby Ashfordian » October 30th, 2018, 11:37 am

GoSeigen wrote:I think they should tell us where it was.



This, we are to believe, is "prudent" management of the government finances:

2010: "The UK has borrowed too much. The UK is bankrupt. There is no magic money tree. We must implement austerity immediately."

2010-2018: Tory Chancellors borrow another £700bn, almost doubling the debt of the "bankrupt" UK govt. £50,000pa tax cut for millionaires, austerity for everyone else.

2018: Miracle! The magic money tree has been found! Party time for everyone. Government debt doesn't matter any more.


GS


I think what we are seeing is the knock on effect of the Labour position of bribing the electorate to get into power. It nearly worked for Labour in 2017 so they know how far they have to go further next time.

While I don't like the conservatives taking this loosening approach, I prefer this to the future problems that Labour's spending would cause. It also somewhat restrains how far Labour could go with their spending if they do get into power.

Unfortunately we are going to have to accept that at some point soonish Labour will return to power. The payback will be painful for all but it is a much needed reality check for those with a socialist agenda.


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