Comments by "Helen Trope" (@heliotropezzz333) on "James O’Brien left astonished by Liz Truss' PMQs performance | LBC" video.

  1. I think a less simple analogy would be that she bought a porsche and a lamborghini without saying how she was going to pay back the money she borrowed for that with a risk of going bankrupt. The lamborghini was a gift for her already wealthy friend (who has 4 lamborghinis already). She says 'why are you asking why I've bought a lamborghini and how I'm going to pay for it? Why is no one talking about the porsche that I've bought to donate to a charity. I bought it with borrowed cash. I gave the cash to another friend, Mr Energy Company, to pay for that and by the way, the charity will be paying Mr Energy Company back for it over the longer term, (but he won't be paying it back to me). I am doing this in the hope that a wealthy relative might leave me something in their will in future though I can't say who that might be or whether they will. The banks are upset at my hopeless lack of credible plans, and they are now threatening to withdraw my credit unless I pay higher interest.
    1
  2. I suppose the markets have the same sort of view as mortgage brokers when they impose an affordability test on would be borrowers. They want to know when and how borrowing can be paid back. They won't rely on some nebulous theory of growth of income in future particularly when the outlook for the future looks difficult. This is interesting because Labour has in its past manifestos, talked of borrowing for investment to produce growth. Investment is more likely to produce growth than tax cuts because it is more targeted at businesses that have consumer demand or can create it, to produce growth and it's growth that will allow the repayment of debt. It's also possible to calculate the anticipated return on investment. However nothing is without any risk. Would the markets, who are risk averse, have taken the same view of Labour's plans I wonder. I'm not defending the Tories here as I can't see how their cuts would have produced growth, but are the markets intolerant of all borrowing by a country already in debt unless there's absolute certainty about the pay back mechanism or is borrowing for investment with a calculated payback time acceptable? The only alternatives seem to be growth in exports (difficult post Brexit) or cuts in spending (difficult politically and morally). I suppose the answer is for countries not to corner themselves in the first place but we are where we are now.
    1