Curtailing social expenditure…

I won’t bore you with more links to past posts. If you are interested in perusing some of numerous previous posts by the same title which should be read along all the posts titled “tic, toc…” you can to a search on this blog.

Countdown to war is still on… but I have a feeling it is accelerating…

Far from me to give any credence to or have respect for their operating model but I happen to agree with Moody’s take on the state of our sovereigns:

http://www.telegraph.co.uk/finance/economics/7950775/Time-is-running-out-for-the-West.html

Some excerpts (but it is worth reading the entirety of this short article) –

Genuinely adverse debt dynamics were only expected to materialise in 15 to 20 years. The crisis has ‘fast-forwarded’ history, eroding all the time available to adjust, ” said the group’s quarterly Sovereign Monitor.

Guido here: That’s right! Because inflation is inherently an accelerating dynamic. Hence the reason that since 1980 sovereign debt in the USA has progressed by 1200% but GDP only progressed by 100% in the same time period.

Countries that “fail to demonstrate the level of social cohesion required to stabilise debt” will lose their AAA rating. “Intra-generational” conflict between young and old requires careful handling. States that delay pension reform risk spiralling downwards. ”

Guido here: In plain English, the above means that social expenditure must be curtailed and that doing so will inevitably generate social unrest that must be managed (i.e. Greece).

This time the threat lies ahead as the aging crisis drives up pension and health costs on a static tax base. “While the current stock of debt is large, it is dwarfed by the accumulation of future liabilities if policies do not change.”

Guido here: As above. Social expenditure must be curtailed.

All the above results necessarily in things like this (of which you will find dozens of examples in previous posts):

http://www.telegraph.co.uk/news/newstopics/politics/7951203/Winter-fuel-payment-cuts-to-hit-millions-of-pensioners.html

The basic winter fuel payment, made to more than 12 million people, will also be cut by £50 for new recipients and £100 for the oldest.

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