Put your money where your mouth is : Wed Jun 06, 2012 1:36 pm  

Well it seems like the coalition has listened and is going big on infra-structure spending. They are considering funding it through peopl'e individual savings, rather than more borrowing. So, for all you Keynsians, you know who you are, get any money withdrawn from your ISA, bank, building society accounts and invest in "growth bonds". Masterstoke from the government - Plan A with Plan B funded by those calling for it.

Re: Put your money where your mouth is : Wed Jun 06, 2012 1:41 pm  

Is that another U turn then?

Not seen the story yet, but your precis sounds very much like it.

Re: Put your money where your mouth is : Wed Jun 06, 2012 1:54 pm  

'Trust us with your savings.'

'Trust us with your savings.'

Re: Put your money where your mouth is : Wed Jun 06, 2012 2:05 pm  

Dally wrote:

Well it seems like the coalition has listened and is going big on infra-structure spending. They are considering funding it through peopl'e individual savings, rather than more borrowing. So, for all you Keynsians, you know who you are, get any money withdrawn from your ISA, bank, building society accounts and invest in "growth bonds". Masterstoke from the government - Plan A with Plan B funded by those calling for it.

On the face of it, it does look like a good idea, using fairly dormant money to fund infrastructure works and, thereby, growth.
It also gives savers a better return on their money than the current low interest rates give them.

However ...
It depends on what infrastructure works we are talking about and where they will be.

And ...
HM Gov can issue bonds at a historically low yield (i.e. cheap interest), so what Gideon is suggesting is that we stump up our savings to pay for infrastructure works and get a higher rate of interest from the developers than HM Gov would have to pay if they did it.
The developers will then recoup their higher interest that they paid us by, erm, charging us to use "their" motorways or leasing them back to us at a higher price than if the government did it.

But hey, it's not "borrowing".

Re: Put your money where your mouth is : Wed Jun 06, 2012 3:37 pm  

El Barbudo wrote:

On the face of it, it does look like a good idea, using fairly dormant money to fund infrastructure works and, thereby, growth.
It also gives savers a better return on their money than the current low interest rates give them.

However ...
It depends on what infrastructure works we are talking about and where they will be.

And ...
HM Gov can issue bonds at a historically low yield (i.e. cheap interest), so what Gideon is suggesting is that we stump up our savings to pay for infrastructure works and get a higher rate of interest from the developers than HM Gov would have to pay if they did it.
The developers will then recoup their higher interest that they paid us by, erm, charging us to use "their" motorways or leasing them back to us at a higher price than if the government did it.

But hey, it's not "borrowing".

nearly as barmy as the Green Deal legislation planned.

Re: Put your money where your mouth is : Wed Jun 06, 2012 3:40 pm  

I've got a better idea.

Prevent any company that utilises "tax efficiency" schemes via any non-EU country from bidding on any government contracts and give 6 months notice of termination of contract to any company who already has such a contract, unless they remove these "efficient vehicles" and start paying their full whack of UK tax.

Then offer 99 year leases at a peppercorn rent, to any charity or non-profit organisation that wishes to build social housing on publicly owned land. Build houses and rent them at 50% of current market rates, with no possibility of "right-to-buy". That would attract investment from insurance companies and pension funds because it also would be a far better rate than gilts.

Re: Put your money where your mouth is : Wed Jun 06, 2012 3:42 pm  

cod'ead wrote:

Then offer 99 year leases at a peppercorn rent, to any charity or non-profit organisation that wishes to build social housing on publicly owned land. Build houses and rent them at 50% of current market rates, with no possibility of "right-to-buy". That would attract investment from insurance companies and pension funds because it also would be a far better rate than gilts.

great idea, never going to happen (with either Tories or Labour in power)

Social Housing is a bit of a "problem child" to our political establishment I am afraid.

Re: Put your money where your mouth is : Wed Jun 06, 2012 3:42 pm  

El Barbudo wrote:

On the face of it, it does look like a good idea, using fairly dormant money to fund infrastructure works and, thereby, growth.
It also gives savers a better return on their money than the current low interest rates give them.

However ...
It depends on what infrastructure works we are talking about and where they will be.

And ...
HM Gov can issue bonds at a historically low yield (i.e. cheap interest), so what Gideon is suggesting is that we stump up our savings to pay for infrastructure works and get a higher rate of interest from the developers than HM Gov would have to pay if they did it.
The developers will then recoup their higher interest that they paid us by, erm, charging us to use "their" motorways or leasing them back to us at a higher price than if the government did it.

But hey, it's not "borrowing".

The government can't borrow the money from the banks because the money that the banks are currently sitting on is the money that the government printed through QE. Quite why they didn't simply print it and then spend it on capital projects is beyond me

Re: Put your money where your mouth is : Wed Jun 06, 2012 3:51 pm  

Sounds like a reasonable idea to me. It's better to get more domestic savers involved with holding UK government bonds, because then when the government ends up paying the interest on the bonds it goes back into the UK economy and gets recycled round. It's why Japan has been able to sustain debt levels that are on a different stratosphere to Europe and the US, because nearly all their debt is owed to Japanese citizens so although their government pays a huge interest bill every year it is paying its own citizens who spend that money back in the Japanese economy.

I will be inclined to do my bit for our great nation and put some money aside in growth bonds, I assume Dally being a fellow patriot will do the same?

Re: Put your money where your mouth is : Wed Jun 06, 2012 3:55 pm  

sally cinnamon wrote:

Sounds like a reasonable idea to me. It's better to get more domestic savers involved with holding UK government bonds, because then when the government ends up paying the interest on the bonds it goes back into the UK economy and gets recycled round. It's why Japan has been able to sustain debt levels that are on a different stratosphere to Europe and the US, because nearly all their debt is owed to Japanese citizens so although their government pays a huge interest bill every year it is paying its own citizens who spend that money back in the Japanese economy.

I will be inclined to do my bit for our great nation and put some money aside in growth bonds, I assume Dally being a fellow patriot will do the same?

The general idea is sound enough and government bonds are about as safe as you can get, the execution of the deal is screwed up though.