Britain's National Debt: DON'T PANIC!!

"Our National Debt problem is terrible, terrible. We must tighten our belts, bite the bullet, take the baby bull by the horns and transform it into a bear, we must eat sackcloth and clothe ourselves in ashes, we must take an axe to public spending,  we must cast tens or hundred of public sector workers onto the dole, woe woe and thrice woe. There is no alternative".  Thus speaks the Cameron today.


Hang on a second. Let's take a look at a picture of our National Debt over time.

Not good, but it has been worse. Note the impact of war on National Debt. If the ConDem Government is serious about national debt, hopefully they will avoid starting any more wars.

Now let's look at comparative figures for other countries. These figures are from here, rounded up.

List of countries' Narional Debt as    %   of GDP.

Zimbabwe      241
Japan             170
Italy               103
India                78
UK                  68 (Dec 2009)
France             67
Germany          63
Canada            62
USA                61
UK                  59 (Sept 2009)
Russia                7

Hmmm. That's not so bad. Second from bottom of this (incomplete) list in September 2009, although we are (just) at the top of the comparable countries in December 2009. That's statistics for you. All these figures vary enormously. The USA debt has been quoted as 70% and then 80% of GDP.

But of course, economics is a complex field. We need to look at other measures.

One is the ratio of debt owed to institutions in the UK, and that owed to foreign investors. Here we find that 36% is owed to foreign sources. We need to see a comparable list of others' debts.  

Another aspect it the Current Account Balance (CAB), which  is derived from balance of trade + Net Factor Income (interest &c) and transfer payments (things like international aid).

We do not do so well on CAB.

Taking the figures from this list,  and dividing them by the figures on this list, (using the IMF figures where possible) we get a percentage which is either positive or negative, a kind of indicator of the profitability of each country.

                   %
Zimbabwe -50
UK           - 4.9

Italy           -3
USA         -2.9
France      -1.5
India         -0.4
Canada    +0.9
Japan       +3.4
Germany  +5.7

All my calculations come with a health warning. Mathematics is not my strong point, but I have tried diligently to press the correct buttons on the calculator, and not to confuse my billions with my millions.

So from these figures, it seems that the problem is not our national debt so much as our current account.

The Current Account is a component, with the Capital Account, of the Balance of Payments, and it would be nice to have a list of countries by Capital Account, but I was unable to find such a list.  However, the ONS says: "The capital account has remained in surplus for over 20 years. A surplus of £3.4 billion was recorded in 2008, constituting the highest recorded cash surplus." So that seems reassuring.

Now, as I said before, I thank all the gods that I am not an economist, but it seems to me that the Government should not be slashing wildly away at the National Debt, at risk of bringing on a double dip recession, so much as tending to our Current Account. Since one of the factors in the CAB is the import/export ratio, we could address it by making more exports, or importing less dysfunctional crap, or by devaluing the pound.

I fully realise that there is more to it than this, that economics is a system, and that all factors should be fed in. Surely there is a computer programme somewhere that can crunch all the figures in real time, according to different weightings?


But in the absence of and Economic Deep Throat,  it does seem on the face of it that the Cleggeron is barking up the wrong financial tree.

(What's more, Edmund Conway at the Telegraph also thinks Cameron is panicking unnecessarily). 
As does Mehdi Hasan at the New Statesman.

The thing about the National Debt is that although it is a very large figure, and the interest payments are a huge drag on public finances,  it is a fact of life, and all countries (bar 4) have a national debt. It goes back hundreds of years (one unsourced story is that we are still paying off the ransom for Richard the Lionheart). It is not going to be paid off in the lifetime of one Parliament. The Budget Deficit is another story, and that should be brought down as soon as practicable, but that "practicable" involves the recession. It is pointless to annihilate the budget deficit if it brings on another UK recession, because that will just bring on another round of debt through falling tax revenues and rising benefit payments.

On balance, it looks as if the Cleggeron is frightening the journalists and the people by quoting huge debt figures out of context, in order to cut government spending, and is going going to crash the economy by going too far and too fast in trying to kill the deficit.

More on the budget deficit.
Economists need to come into the digital age.

Israel overshadows

Yesterday was perfect weather, walking Vegger through the woods, pottering in the garden; but all the time overshadowed by what is happening in Gaza. It reminded me of the time when the Bush/Blair Iraq war started.



A Wood in Somerset, Iraq


Stone still    in opalescent air
trees wait supportively.

Light   splinters on new leaves.

Sun for the seventh day
blesses an English spring.

Two thousand lives away
this anticyclone fires up a storm
that drowns a nightmare world
in ochre light.

The peace I feel
leaning against the powerful fist
that grips the earth, cushioned with moss,
back shaped, kind as an elephant,

finds its reflection in a furious world
of men who sleep walk,
fall on their mother's skin,
give screaming fire,
act and react,
but cannot take it in.

While birdsong fills my head,
sharp as the sunlight
sparking on those tiny points of green.

One hammer headed woodpecker,
knowing no better and no worse,
fires off his rounds.

I should be suffering,
but the world is folded at my side,
its front page images of death
have left off stirring
in this gentle air.

© Richard Lawson
27.3.03

Israel/Palestine; How do we get peace?

Israel/Palestine looks like Northern Ireland in the Troubles, or South Africa under apartheid. Many pundits shake their heads and intone, "Insoluble". Matthew Parris just wants to stop thinking about it. He wants to wipe I/P off the cognitive map, and in this he is, dare I say it, somewhat like AhmadiNajad, although the latter only wants to wipe the I part of I/P off the map.

It looks insoluble because there are fundamentalist religious bigots on both sides. We have experience of this little problem here in Northern Ireland. Dogmatism and its false absolutes are a powerful force, but war-weariness is in the end and even stronger force. It usually takes a generation to for war to cause people to drop the simple dogmatic absolutes and adopt some realistic compromises. The first intifada was 23 years ago. That means that we should be ready for a resolution soon.

This conflict is a complex system, with multiple lines of causalities, and  multiple positive feedback loops. The question is NOT a simple binary choice of "Which cause is right, the Palestinian cause or the Israeli cause?" The question is, "How can we help reverse the process of escalation of violence?"

Part of this is for the two Governments involved, Israeli and Hamas and their supporters, to understand that their mutual paranoia and mutual violence is counter productive to the interests of their people.

Another important part is to be aware of the many cross-community peace initiatives that exist.

Politicians deal in absolutes. The people deal in realities.

My favourite reality based, cross community initiative is Friends of the Earth Middle East.  I want to see their work supported by the EU, and magnified many times over, into a serious water management system.

If the root cause of the conflict is the inward migration of significant numbers of people, then the answer is to make the land bigger, so that it can support them all.  That sounds impossible, and spatially it is impossible, but functionally it is not. Land is only useful if it is fertile. Water and biological waste recycling are all that is required to make arid land fertile. This can be done with water harvesting, water conservation, and reforestation from the coast inwards. The economic effort of doing this will increase prosperity, and divert energy from hate-related activities.

The vicious cycle of hate can stop. The first step on this journey is for us to stop believing that hate is some kind of a solution, and that hate and paranoia are permanent state of affairs. They are not.

Israel, Gaza, Warsaw Ghetto

Israel, your God has given you so much.
Intelligence, wealth, influence, a sense of identity and destiny.
Why does your God not give you ability to see the likeness of Gaza to the Warsaw Ghetto?