Returning to the markets

[Firefly]

OK, this is bothering me and I was tempted to open a post in LOS but hope it can be addressed here... over the past few weeks, time and time again, different politicians have mentioned that we need to have these austerity measures (including household charge) so that we can improve our lending position and return to the markets.

Why on earth is this our goal? Surely, we must have learnt by now that borrowing is not the answer? Surely the goal should be that we are implementing these measures so we don't have to go to the markets? Can anyone explain the logic of this to me????

 

[Sunny]

OK, this is bothering me and I was tempted to open a post in LOS but hope it can be addressed here... over the past few weeks, time and time again, different politicians have mentioned that we need to have these austerity measures (including household charge) so that we can improve our lending position and return to the markets.

Why on earth is this our goal? Surely, we must have learnt by now that borrowing is not the answer? Surely the goal should be that we are implementing these measures so we don't have to go to the markets? Can anyone explain the logic of this to me????

Because we only have enough cash to get us into the middle of next year. If we don't return to the markets to refinance maturing debt, we will need another bailout. They are not saying they want to return so they can pile on more debt.

 

[Calico]

I think Firefly's point is that we should get rid of the deficit altogether by the time the bailout ends and have a balanced budget for once. Personally, I agree. It's scary when you look at how much the government overspends.

 

[Sunny]

I think Firefly's point is that we should get rid of the deficit altogether by the time the bailout ends and have a balanced budget for once. Personally, I agree. It's scary when you look at how much the government overspends.

Even ignoring how difficult (impossible) it would be to get rid of the deficit in one year, you still have the issue of maturing debt which you either pay back using budget surpluses or you refinance. We have about €8billion of debt maturing in 2014. So you would have to factor in that €8 billion in to your balanced budget calculations unless we can refinance.

Everyone moans that SME's can't get access to credit through the banks. Countries are no different. That doesn't mean you rack up unsustainable debt but having access to credit is preferable to not having access to it.

By the way, I am not arguing against cutting the deficit by as much and as quickly as we can.

 

[Firefly]

Because we only have enough cash to get us into the middle of next year. If we don't return to the markets to refinance maturing debt, we will need another bailout. They are not saying they want to return so they can pile on more debt.

Got it now

(exhales)

thanks!

Firefly.