You were Warned well inadvance

I posted this in February 2014, I’d read it again and then look at what’s been happening since September:

https://thehovistrader.wordpress.com/2014/02/20/now-is-the-time-to-beware/

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A look back in History – UK Debt & Spending

There’s many reference items so what I’ll do is show them in date specific sections, that way you can follow the time line:

Here’s an overall chart of UK debt from the 1600’s to 2011

Debt 1692-2011

As we can see a good old war helps to increase the debt levels.

Here’s the DEBT levels for various periods of time during the past 100 years:

Debt 1900-2011

It’s fairly obvious that for some reason British borrowing really ramped up in the 1970’s and especially 1975 onwards, not really looking back.  This chart proves that NO government can massively impact debt levels through conventional cut-backs and austerity.  The hope here is that successive generations of workers have the ability to maintain the income to the UK – With a growing economy and population that is entirely possible and it happened.

Debt 1950-2000

Debt 1950-2000

Debt 2000-2010

There’s a big fallacy that certain governments reduce spending and others increase it, let’s study it decade by decade, starting in 1900:

Spending 1900-1910

1900-1910: Fairly flat spending with falling net Debt, during this time there were a couple of major USA (DJIA) stock market plunges.Spending 1910-1920

1910-1920:  War years, you cannot avoid increasing in spending during these periods, the fall into the early 1920’s is also a typical reduction in spending following a major war.

Spending 1920-1930

1920-1930: Increasing in spending during inflationary periods, spending throughout this period was more than prior to the amount previous to World War I –

Spending 1930-1940

1930-1940: Study the REACTION to the 1929-1932 stock market crash!  The UK government did not get it’s house in order until AFTER the event and then due to World War II embarked upon another major spending spree to finance the war

Spending 1940-1950

1940-1950: Typical spending tail-off following a major war, But notice the higher spending level – the rebuilding of a nation begun and the inhabitants would have to pay for it at some stage.

Spending 1950-1960

1950-1960: The start of increased Inflation and spending.

Spending 1960-1970

1960-1970: Continuation of spending

Spending 1970-1980

1970-1980: and the spending continues – thank god for all those UK workers, oh wait, this is the period of time were strikes and major recessions are occurring, consult the UK debt chart for this period to see how it was funded!

Spending 1980-1990

1980-1990: spending continues

Spending 1990-2000

Spending 2000-2012

From 1900 we’ve had a great period of Inflation throughout the UK, we could break down the amount of spending by item such as health, welfare etc but I’ll leave that up to the reader.

OK, so it should now be 100% clear that no government regardless of political party can cut the amount it spends, of course it can trim spending but non have actually managed to cut it in over 100 years!  what happens is governments of all natures get tied into the spending of it’s and the PREVIOUS governments spending commitments – this is why I say having a government in power for just 5 years is a false economy, they can’t untangle the spending web of the previous administration, especially if the previous administration really messed things up.  The Chinese have a good stance in electing governmental boards for periods of 10 years (In my opinion)

The message here, is quite easily understood, MP’s fail to take the correct action with regards to spending, they take your hard earned taxes and spend them.  The ultimate message is that you need more people working than not working so that the taxes of the workers can fund the country, a growing economy also significantly helps.

and now for the Political parties holding office since 1900:

Marquess of Salisbury, 1895 – 1902, Conservative

Arthur James Balfour, Conservative, 1902 – 1905

Sir Henry Campbell-Bannerman, Liberal, 1905 – 1908

HH Asquith, Liberal, 1908 – 1916

David Lloyd George, Liberal, 1916 – 1922

Andrew Bonar Law, Conservative, 1922 – 1923

Stanley Baldwin, Conservative, 1923

Ramsay MacDonald, Labour, 1924

Stanley Baldwin, Conservative, 1924 – 1929

Ramsay MacDonald, Labour, 1929 – 1935

Stanley Baldwin, Conservative, 1935 – 1937

Neville Chamberlain, Conservative, 1937 – 1940

Winston Churchill, Conservative, 1940 – 1945

Clement Attlee, Labour, 1945 – 1951

Sir Winston Churchill, Conservative, 1951 – 1955

Sir Anthony Eden, Conservative, 1955 – 1957

Harold Macmillan, Conservative, 1957 – 1963

Sir Alec Douglas-Home, Conservative, 1963 – 1964

Harold Wilson

Labour, 1964 – 1970

Edward Heath

Conservative, 1970 – 1974

Harold Wilson

Labour, 1974 – 1976

James Callaghan

Labour, 1976 – 1979

Margaret Thatcher

Conservative, 1979 – 1990

John Major

Conservative, 1990 – 1997

Tony Blair

Labour, 1997 – 2007

Gordon Brown

Labour, 2007 – 2010

David Cameron

Conservative, 2010 – Present

See what I mean about it doesn’t really matter which parties in power – the spending will always continue.

Have a think about the restrictions that would have to be applied if the government did not borrow money – could the country function without relying on it’s credit card?

I’ve only just scratched the surface and I don’t intend to turn this in an economics lesson, as you can research further should you wish.

Just thought I’d highlight a few areas.

A Free 40-Page Download: A very insightful Investment Report for 2013

Dear investor,

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  1. Global stocks are near multi-decade, technical price junctures.
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  3. Despite a multi-year rally in stocks, the AP reported on Dec. 27 that mainstream investors are selling shares at breakneck pace. “It’s the first time ordinary folks have sold during a sustained bull market since relevant records were first kept during World War II.”

Politicians and central bankers worldwide reassure investors that the credit crisis of 2007-2009 will turn out to be nothing more than a footnote in market history — despite the compelling proof that it never truly ended.

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War & the Stock Market – Are they linked? Part 2

A Socionomic View of War, Stocks and Commodities

By Alan Hall, originally published in the October 2008 Global Market Perspective Download PDF (868 KB)

The principle of Occam’s Razor states that the explanation of any phenomenon is more likely to be correct if it makes as few assumptions as possible. Socionomics makes a single assumption: that endogenous social mood ultimately dictates the character of collective social action.

This hypothesis reverses the conventional direction of inquiry about what causes war. Instead of asking how war affects the economy, stocks or commodities, the socionomist asks, “How do fluctuations in social mood affect the prices of stocks and commodities, the strength of the economy and the likelihood of war?” This non-conventional approach to causality eliminates conflicting assumptions and rationalizations, and provides the simplest explanation of the available data.

Using socionomics’ single assumption, this report examines war’s relationship to the economy, real stock prices and commodity prices.

War and the Economy From 1776 to 2008, United States military forces have been deployed hundreds of times, both abroad and domestically. In this report, we will examine only the major wars that involve the United States.

For many years after World War II, most economists and historians assumed that war, man’s most destructive activity, was good for the economy. A recent quote from Nobel-winning economist Joseph Stiglitz illustrates the popular change of opinion: “It used to be thought that wars are good for the economy. No economist really believes that anymore.”

EWI has always disagreed with this idea and observed that the error arose from incorrect assumptions about what causes war. In 1999, The Wave Principle of Human Social Behavior addressed this:

Major mood retrenchment produces war, as humans finally express their collective negative mood extreme with representative collective action. As with economic output, the size of a war is almost always related to the size of the bear market that induces it.

An initial look at the steady ascent of the U.S. Real Gross Domestic Product — the upper line in Figure 1 — suggests that U.S. economic growth is largely unaffected by its wars, which have mostly been waged elsewhere. Looking more closely at the upper line, we can see downturns in real GDP near the end or shortly after each of the completed wars. In the lower line, the real GDP rate of change showed net slowing during all wars except World War I. Just after World War II, real GDP suffered its second lowest rate of change since at least 1870. The data shows that the economy has usually slowed during war and regressed afterward.

Figure 1 – Click Image to Expand

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