Thursday, April 23, 2009

New Labour will bankrupt us

At least, that is what the Treasury's budget statement says.

The Treasury compiles a measure of public sector net worth. It adds up what the government owns - buildings, land, capital equipment, cash, assets, foreign reserves etc - and then subtracts what it owes. Currently, the government's balance sheet is positive - it owns 28 percent of GDP more than it owes. By 2014, it will be in the red.

When an institution owes more than it owns, it is bankrupt.

8 comments:

  1. The UK is bankrupt. That sums it up.

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  2. And what's the penalty for knowingly operating a insolvent organisation?

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  3. Its not bankrupt, its insolvent.

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  4. A watershed moment - we're coming off the top table of nations - with this financial position I don't see how we can stay on.

    + if we're insolvent we should liquidate. As I don't see how we could liquidate without compromising national security, we'll have to default. To default is to be bankrupt.

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  5. Does this chart include the presumably significant going-concern value of HM Revenue & Customs? ;)

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  6. When an institution owes more than it owns, it is bankrupt. No! It is bankrupt when it cannot pay current expenses with current income (assuming it cannot borrow to pay because there are no net assets).

    Just default already - Defaults happens all the time in Latin America; Besides, it would be fun to watch the panic.

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  7. big merve will step in long before that happens

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