The Evil “Markets”

Our national debt is, give or take, around £1.1 TRILLION.

We hear about the “markets” and how they lend money to the UK government to make up for shortfalls between tax revenue & public spending costs every year (the annual deficit), and how the “markets” control the interest rate the government pays on its debts.

So to whom does the government owe the national debt? Are the “markets” made up of evil capitalists chomping on big cigars in smoke-filled rooms plotting the destruction of our societies?

Well, actually the “markets” in this case are primarily you & I.  We, mainly through our savings, life & endowment policy premiums, pensions contributions and even union subscriptions have lent about 75% of the national debt to our own government (the other 25% are lent by foreign institutions and governments)

Of course you & I didn’t write cheques to the government individually, but our banks, life & pension companies, unions etc, directly or indirectly, lent on our behalf.

In theory, we should tell the government not to cut public spending and borrow even more from us, and at higher interest rates.

Awkward, isn’t it?

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About Art Li

Briefly, I am a lawyer, keen amateur photographer, dog lover and politics junkie but not a member of any party. Full details on Biography page. Follow me on Twitter @Art_Li.
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2 Responses to The Evil “Markets”

  1. Riz says:

    You have made something clear in this post for a lot of people that fail to understand this Art.

    But I disagree with your final assertion if it is indeed a serious one.

    We may be the indirect lenders in this situation. However, we won’t benefit from the higher rates of interest, increasing deficits and debt. In fact, the short term effects could cause damage so severe it could lead to a sovereign default in the long run. In which case, we’re really fucked.

    But hey, I’m only 21 – relatively speaking I’ve paid very little into my savings/investments. I can start again.

  2. Art Li says:

    Ha! Thank you for your comments. Yes my final assertion was tongue in cheek. In theory, we can, but in practice that could start off a chain of events eg. lending/LIBOR rates going up, defaults by mortgage borrowers, drying up of wholesale capital, collapse in housing market etc etc which took place during the last financial crisis in 2008. And we don’t want that again.

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