Tuesday, October 21, 2008

The Mystery of Northern Rock and the other 1.2 trillion

A while ago Fraser Nelson writing in the Coffee House Blog wondered if a certain Gordon Brown, our erstwhile PM, might try to hide the nationalisation of the Northern Rock away so it didn't count against the National Debt. He wrote this thinking it might not be possible.

Well lo and behold we now hear that he has done just this. With a sleight of hand Gordon has made 7% of our supposed National Debt just disappear. That's 82 billion according to my calculations from the ONS website. This means that the figures quoted by Gordon Brown in parliament yesterday for a national debt percentage of 37.9% of GDP were entirely bogus. They are now at 43.4% of GDP. Of course Gordon has redefined debt now so he can use some "doublespeak" to make it sound good.

Gordon has basically hidden the debt. It's like me saying I have no debts, oh, apart from my mortgage which doesn't count as it's really an asset. The problem with this is that I have to pay it off which of course leaves me less money to deal with my other spending.

Now of course Gordon and Alistair Darling think they can spend, spend spend in an orgy of Keynesian economic theory to sort out their earlier problems. Of course these problem are not of their own making, they are the devil's spawn sent from America to destroy us.

Of course the figures shown above are entirely bogus as described below. Gordon, who wants banks to be transparent, has hidden away much of the true national debt. His creative accounting with the public pensions and PFI has left true debt at a level vastly above that which he purports is within EEC guidelines. The true figure may be as much as 1,854 billion, 3 times as much as Gordon wants to admit and makes our National Debt over 120% of GDP, a truly remarkable figure, which eclipses that of even Italy. These figure were calculated by Conservative MP, Brooks Newmark, he

says the true level of government borrowing is much higher. He calculates – including the cost of projects financed through the PFI, unfunded public sector pension liabilities, the debt incurred by Network Rail and the recent nationalisation of Bradford and Bingley – the true figure is at £1,854 billion – three times greater than the official figures, equivalent to 126.9 per cent of GDP, or £75,984 for every household in the country. "The true figures for government debt are the result of this government's loose fiscal policies and excessive spending,"

Writing in the Guardian Brooks has the following to say

The British government often congratulates itself on its efforts to keep public finances on a stable and sustainable level. Yesterday Gordon Brown even claimed:

"Debt is considerably lower than a decade ago".

However, Britain's public debt is actually £1,866 billion, equivalent to 125.5% of GDP, nearly three times larger than the government's published figure of £645 billion and 43.4% of GDP. This measures out as a debt of £76,475 per British household.
While figures recently released on the scale of the government's public spending bonanza point to government borrowing leaping to a record £8.1 billion in September, this is only the tip of the iceberg. Opaque off-balance sheet measures have, until
revealed in The Price of Irresponsibility published by the Centre for Policy Studies, kept hidden the full cost of projects financed through the Private Finance Initiative, the extent of unfunded public sector pension liabilities, the debt incurred by Network Rail and the recent nationalisation of Bradford &Bingley. Yet, the figure may be much worse. While the exact impact on the public finances of the government's recent bail-out of the banking sector is as yet unknown, it could imply an addition of as much as £500 billion to the balance sheet. This would increase public debt to a massive £2,366 billion, which is 159.1% of GDP, or over £96,967 per British household.

I just wish I could make my mortgage disappear like Gordon does.

Making Northern Rock disappear Coffee House

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