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Friday, 9 April 2010

The deficit

It's interesting looking at the discussions about the deficit.

First is the spin that deficit means debt. Even the BBC have been peddling this.

Second is the debt figure. Left off the list is PFI, state pension, state second pension, civil service pensions, bank bailout, nuclear decommissioning, outstanding invoices, ... The total figure is huge, and dwarfs the gilt debt. All Enron accounting. Just what a blagger needs to make money.

Then take the "halve the deficit in four years" statement. Halving the deficit means 170 / 2 = 85 billion a year. However, the debts gone up in the mean time. 5% interest rates (optimistic) over 20 years means 50 billion on debt repayments. Total tax increases and spending cuts is 135 billion.

So where is this going to come from? First is spending cuts. However, don't forget inflation. Second is tax rises. However, the spin is growth. The missing word is growth in taxation. It's the only way the government gets the cash.

So will it work? Lets say the 'investment' gets a million back to work. 13K a year in benefits (tax free - nice blag). 1 million times 13K is 13 billion. So that 122 billion to come from taxes. Can those returning to work make up the difference? 122 billion divided by a million is 122,000 a year in taxes. Call it 300K a year in salary.

How many of the unemployed are going to earn 300K a year?

So who else could we tax? 122 billionaires, take everything. However, we still have to find another set the next year.

ie. It doesn't work. Period. With financial geniuses in the government who are arguing about peanuts whilst there is this massive hole shows huge incompentence.

That's why blagging the government is so easy, and so rewarding.

Lord Blagger

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