Good news from the chancellor

You have to agree that George Osborne seemed to be happy with his autumn statement yesterday.

But I am not sure if everyone understands what he means when he says that the deficit is reducing.

If you were to tell me your borrowing was reducing, most people would assume that you have paid it back and you don’t owe as much as you used to. The Chancellor at the dispatch box

When Chancellors tell us the deficit is reducing what they mean is that they are borrowing less this year than either they had budgetted or less than last year or more often less than the last government.

Of course borrowing less than you expected means you are still borrowing and that you owe more this year than you did last year.

He is forecasting actually paying some borrowing back in a few years time – 2018-19.

But surely he said he was repaying some borrowing:

And this morning I announced we will repay the entire outstanding national debt incurred to fight the First World War.

How can he say this?  Table A of the official statement does show gilt repayments of £64.5billion – but new gilts issued will be £125.9billion.

So all he really means is that he is refinancing his existing debt.

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And how about some significant debt relief

According to the Jubilee Debt Campaign,

Sierra Leone, Guinea and Liberia are together spending millions of dollars on debt payments while trying to fight Ebola. This US proposal to cancel $100m of debt via the IMF is a good start, but more is needed. The three countries owe $3.6 billion in foreign debts in total.

US urges debt relief

A bit of Argie bashing

You might be forgiven for thinking this is someone in the UK complaining about MaradonaMaradona’s performance in a world cup.

But no, this is a US court apparently telling another sovereign government what to do with its money.  Or to be more precise, telling it that it cannot pay a legitimate debt until it has paid off a debt speculator.  As a result Argentina has again defaulted on a debt – but this time not because it wants or has to, but because a US court will not allow it not to.

Have a look at http://jubileedebt.org.uk/actions/support-argentinas-fight-against-vulture-funds for more details.

The “vulture fund” which bought Argentine debt in the hope of making a profit may not be a bank or be involved in the lending of money commercially, but it is making use of the system to try to make a substantial profit.  If it had accepted the debt write-down agreed by most of (93% of) Argentine’s lenders, it would have made a mere 300% profit, but it is holding out for more.

And the US court support for the speculator’s position is making debt forgiveness even more difficult to achieve for hard-pressed countries around the world.

So, I am campaigning for a moratorium on all commercial debt.  This would get rid of this sort of speculation at a stroke.

Of course there are other reasons for my proposal – have a look at the about page and other posts and let me know if you agree.

How to grow debt

Jubillee logo A recent campaign by the Jubilee Debt Campaign highlighted a few issues including:

  • The people with the money seem to think that the best way to help a country which is up to its neck in debt is – to lend it some money.  For example back last summer there was a report on Ghana which had debt cancelled in 2004 and 2005 but looks as though its debt repayments will rise to the same amounts or more by the mid 2020s.
  • The government seems to think that lending money is giving aid.  Apparently as long as the interest rate charged is less than 7%, government loans can be classed as aid.
  • Most lending to low-income countries comes from international lenders including the World Bank and the IMF

I know I am a simple soul, but this does not sound like the best way to help countries out of debt.