Thursday, May 21, 2009

Will Britain lose its AAA credit rating?

S&P a leading credit rating agency has put Britain under review. According to S&P, Britain's total net debt may reach 100% of the nations GDP. In plain english, that's not good for Britain.....no pun intended. Here is the article from the Telegraph.co.uk:

http://www.telegraph.co.uk/finance/financetopics/recession/5362996/Britains-AAA-rating-under-review-for-first-time-in-30-years.html

Tell us what you think................

11 comments:

Unknown said...

From the looks of the article, the downward spiral, and the enormous national debt, it appears that Britan may lose its AAA credit rating. A drop in the rating, would most likely be detremental to Britan's economy; and the same could be said of the U.S.. This brings up another question, regarding "going green" in these poor economic times. I'm not sure now should be the time, these government agencies (Britan/U.S.) should be pumping money into these black hole programs. I know this is going off subject, but the thought is that these types of programs will create jobs. However, if we look at unemployment in countries that have adopted these programs (such as Spain) we can witness the black hole effect these programs have. With Spains unemployment rate rising 15% in the last year alone; it doesn't appear the jobs are being created as once thought. Sure the unemployment rate dropped when these sort of programs were initially adopted, due to the govt's pumping money into the programs. However, these programs seem to be going no where fast, and we can see whats happening to the national debt of govt's supporting these programs. The new businesses created are now asking for more money, and without it more jobs will be loss. At some point you must admit your failure and cut your losses... I know I went way off topic here, but when will the handouts stop? Any businessman/woman knows to look at profits and losses. The losses are huge, and yet the governments continue to throw away money. Science will find a way with or without money. Most breakthough inventions are created in times of necessity, not when they can sit and flounder in free cash. Off topic, but relevant... reply with any thoughts.
JD

The Economic Watchdog said...

JD,

Your are correct. "Going Green" is more of a term that marketing uses to sell a product or service. Green technology has been around for a very long time. I would say my grandparents were "Green" before "Green" was en vogue. In fact, all alternative power sources only account for about 1% of the U.S. consumption needs. Furthermore, if alternative energy can not at least achieve 100% ((1=1) or (true sustainability)) of our consumption needs that will have a negative effect on the economy. In plain english, that means that the economy will shrink. In order to achieve economic growth a resource is needed that can power growth. If we examine history, we will see that growth occurs when humanity achieves new methods of agriculture that allows for a population to expand. Furthermore, you can examine economic growth in stages. Stage I= Pre-Agriculture. Stage II= Agriculture (horse,plow,more advanced crop rotation). Stage III= Industrial Agriculture (Powered by Machines and Oil started @ the early 1800's). Stage IV=??????. Will we achive stage four? Mabye? Mabye not? I agree that if we can achieve Stage IV it will only be out of necessity. As for pumping cash into the economy......When recessions are not systemic it can be useful to apply monetary policy to correct and create a quick cylical recovery. However, in a large systemic failure (such as the one we are in now) it creates a scary economic scenario with the possibility of hyperinflation. To understand how this can occur it helps to examine the monetary policy history of Germany, Zimbabwe, Argentina, Fall of Rome etc... and fiat currency. You might want to examine some of my own work on sustainability. I plan to create a video presentation that will cover this very topic. Thanks for the comment JD. I hope this information helps.

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