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rwpikul
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« Reply #15 on: February 23, 2009, 21:39:48 EST »

The decrease in tax revenue is a completely separate issue.  The huge increase in the national debt has been caused by nationalizing banks not by the fall in tax revenue which only accounts for a few tens of billion of the increase.  I see that they have mentioned it in that article.  So, I suppose they have talked about it, but it's hidden in another article about a different issue.

The banking debt issue got about a third of the article, and they had to pick something for the headline.  The BBC chose to go with what is actually a more important issue, the loss in income.  They made this choice rather than going for a sensational number that is actually a bit misleading, as those particular debts are linked to assets which have value and which should become income generating as the economy recovers.


One of the advantages of public media is that they are less prone to go for the overblown headline, as they don't have as much need to sell papers with things like "Costs balloon from $3.8 to $12.6 Billion."[1]


[1] Based on real situation, the $3.8 did not include two items that were about a billion each, and most of the increase from the real cost of $6bn was not due to overruns but from interest accrued during construction, (which had shot up from ~5% to almost 20%).
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« Reply #16 on: February 24, 2009, 09:07:17 EST »

The decrease in tax revenue is a completely separate issue.  The huge increase in the national debt has been caused by nationalizing banks not by the fall in tax revenue which only accounts for a few tens of billion of the increase.  I see that they have mentioned it in that article.  So, I suppose they have talked about it, but it's hidden in another article about a different issue.

The banking debt issue got about a third of the article, and they had to pick something for the headline.  The BBC chose to go with what is actually a more important issue, the loss in income.  They made this choice rather than going for a sensational number that is actually a bit misleading, as those particular debts are linked to assets which have value and which should become income generating as the economy recovers.
This is all dubious.  Certainly the loss of tax revenue is a major issue.

The increase in national debt is a much larger issue though.  The banks have assets in their loans and these will generate an income stream.  It is very doubtful though that that income will cover the cost of their debts.  There is likely to be a large shortfall.

RBS may continue to make a profit.  It is very unlikely though that Northern Rock or Bradford & Bingley will.
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rwpikul
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« Reply #17 on: February 25, 2009, 01:41:04 EST »

The decrease in tax revenue is a completely separate issue.  The huge increase in the national debt has been caused by nationalizing banks not by the fall in tax revenue which only accounts for a few tens of billion of the increase.  I see that they have mentioned it in that article.  So, I suppose they have talked about it, but it's hidden in another article about a different issue.

The banking debt issue got about a third of the article, and they had to pick something for the headline.  The BBC chose to go with what is actually a more important issue, the loss in income.  They made this choice rather than going for a sensational number that is actually a bit misleading, as those particular debts are linked to assets which have value and which should become income generating as the economy recovers.
This is all dubious.  Certainly the loss of tax revenue is a major issue.

The increase in national debt is a much larger issue though.  The banks have assets in their loans and these will generate an income stream.  It is very doubtful though that that income will cover the cost of their debts.  There is likely to be a large shortfall.

You missed my point:

It's not that there is certain to be no government debt from this at the end, (although there is a reasonably good chance of this[1]), but that the $Big Number$ is misleading for several reasons.  Furthermore, this isn't "UK Government borrowing money to bail out banks", but "Banks ending up under partial government ownership and already existing debts within the banks appearing on the government books."  With the latter, when the government stake is eventually sold off any remaining such debts go with the banks off of the government books.


[1] Look at the Chrysler bailout from the 1970s:  The US government ended up making money hand over fist because they ended up with a large equity stake that could be sold after the recovery.
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« Reply #18 on: February 25, 2009, 09:55:52 EST »

The decrease in tax revenue is a completely separate issue.  The huge increase in the national debt has been caused by nationalizing banks not by the fall in tax revenue which only accounts for a few tens of billion of the increase.  I see that they have mentioned it in that article.  So, I suppose they have talked about it, but it's hidden in another article about a different issue.

The banking debt issue got about a third of the article, and they had to pick something for the headline.  The BBC chose to go with what is actually a more important issue, the loss in income.  They made this choice rather than going for a sensational number that is actually a bit misleading, as those particular debts are linked to assets which have value and which should become income generating as the economy recovers.
This is all dubious.  Certainly the loss of tax revenue is a major issue.

The increase in national debt is a much larger issue though.  The banks have assets in their loans and these will generate an income stream.  It is very doubtful though that that income will cover the cost of their debts.  There is likely to be a large shortfall.

You missed my point:

It's not that there is certain to be no government debt from this at the end, (although there is a reasonably good chance of this[1]),
[1] Look at the Chrysler bailout from the 1970s:  The US government ended up making money hand over fist because they ended up with a large equity stake that could be sold after the recovery.
The Chrysler bailout was a very special situation.  It was much more like a company going into Chapter 11 bankruptcy than anything else.  The government did not lend it money, rather it guaranteed some of its existing debts.  It didn't guarantee all, some of the debtors only received fractions of their original stakes.

The story about "making money" is dubious.  The Federal government were paid a fee for guaranteeing the debt.  This fee was very low though compared to the risk the government took.

but that the $Big Number$ is misleading for several reasons.  Furthermore, this isn't "UK Government borrowing money to bail out banks", but "Banks ending up under partial government ownership and already existing debts within the banks appearing on the government books."  With the latter, when the government stake is eventually sold off any remaining such debts go with the banks off of the government books.
It is not inaccurate to say though that the bank bailout has led to this increase in debt, which is what the newspapers say.  The debt has increased because of the bank nationalizations, as you say.  Each of the newspapers I mention explain this, none say that the figure is in loans to the banks or imply that.
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rwpikul
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« Reply #19 on: February 26, 2009, 01:07:37 EST »

The banking debt issue got about a third of the article, and they had to pick something for the headline.  The BBC chose to go with what is actually a more important issue, the loss in income.  They made this choice rather than going for a sensational number that is actually a bit misleading, as those particular debts are linked to assets which have value and which should become income generating as the economy recovers.
This is all dubious.  Certainly the loss of tax revenue is a major issue.

The increase in national debt is a much larger issue though.  The banks have assets in their loans and these will generate an income stream.  It is very doubtful though that that income will cover the cost of their debts.  There is likely to be a large shortfall.

...

Quote from: Current
Quote from: rwpikul
but that the $Big Number$ is misleading for several reasons.  Furthermore, this isn't "UK Government borrowing money to bail out banks", but "Banks ending up under partial government ownership and already existing debts within the banks appearing on the government books."  With the latter, when the government stake is eventually sold off any remaining such debts go with the banks off of the government books.
It is not inaccurate to say though that the bank bailout has led to this increase in debt, which is what the newspapers say.  The debt has increased because of the bank nationalizations, as you say.  Each of the newspapers I mention explain this, none say that the figure is in loans to the banks or imply that.

As I have said to Psy on numerous occasions:  Respond to my position or don't respond at all.

This isn't about what the _articles_ say but what the _headlines_ say, and what is the lead story when a particular blogger happens to look.
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« Reply #20 on: February 26, 2009, 13:50:17 EST »

The banking debt issue got about a third of the article, and they had to pick something for the headline.  The BBC chose to go with what is actually a more important issue, the loss in income.  They made this choice rather than going for a sensational number that is actually a bit misleading, as those particular debts are linked to assets which have value and which should become income generating as the economy recovers.
This is all dubious.  Certainly the loss of tax revenue is a major issue.

The increase in national debt is a much larger issue though.  The banks have assets in their loans and these will generate an income stream.  It is very doubtful though that that income will cover the cost of their debts.  There is likely to be a large shortfall.

...
Ah now, are those dots an argument?

Quote from: Current
Quote from: rwpikul
but that the $Big Number$ is misleading for several reasons.  Furthermore, this isn't "UK Government borrowing money to bail out banks", but "Banks ending up under partial government ownership and already existing debts within the banks appearing on the government books."  With the latter, when the government stake is eventually sold off any remaining such debts go with the banks off of the government books.
It is not inaccurate to say though that the bank bailout has led to this increase in debt, which is what the newspapers say.  The debt has increased because of the bank nationalizations, as you say.  Each of the newspapers I mention explain this, none say that the figure is in loans to the banks or imply that.

As I have said to Psy on numerous occasions:  Respond to my position or don't respond at all.

This isn't about what the _articles_ say but what the _headlines_ say, and what is the lead story when a particular blogger happens to look.
This is what the headlines say:

* The Telegraph "RBS and Lloyds could add £1.5 trillion to UK debt"
This is accurate it does not imply that the £1.5 trillion is coming from government borrowing.

* The Times "Bailed out banks add £1.5 trillion to UK public debt"
Again this is quite accurate.  Notice it says the the "Bailed out banks" have done this, not the "bank bailouts".

* The Indo "Public borrowing soars to record levels"
Accurate.

* The Guardian "Bank bailout could raise national debt by £1.5 trillion"
Now, in this case I'll admit it could be read to mean that the loans cost this much.

So, the newspapers can hardly be attacked as a group for being misleading.
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rwpikul
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« Reply #21 on: February 27, 2009, 00:40:30 EST »

As I have said to Psy on numerous occasions:  Respond to my position or don't respond at all.

This isn't about what the _articles_ say but what the _headlines_ say, and what is the lead story when a particular blogger happens to look.
This is what the headlines say:

* The Telegraph "RBS and Lloyds could add £1.5 trillion to UK debt"
This is accurate it does not imply that the £1.5 trillion is coming from government borrowing.

* The Times "Bailed out banks add £1.5 trillion to UK public debt"
Again this is quite accurate.  Notice it says the the "Bailed out banks" have done this, not the "bank bailouts".

* The Indo "Public borrowing soars to record levels"
Accurate.

* The Guardian "Bank bailout could raise national debt by £1.5 trillion"
Now, in this case I'll admit it could be read to mean that the loans cost this much.

So, the newspapers can hardly be attacked as a group for being misleading.

Asked and answered:  The £1.5 trillion number is in and of itself misleading for several reasons I have already pointed out.

It is possible for a statement to be both true and misleading, thus pointing out that a statement is true is not a defence against a claim that the statement is misleading.
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« Reply #22 on: February 27, 2009, 04:44:01 EST »

Asked and answered:  The £1.5 trillion number is in and of itself misleading for several reasons I have already pointed out.

It is possible for a statement to be both true and misleading, thus pointing out that a statement is true is not a defence against a claim that the statement is misleading.
I don't think that the statement is misleading at all.  Why do you think it is misleading?  You have said that the "that the $Big Number$ is misleading for several reasons." What are the reasons?
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Heq
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« Reply #23 on: February 27, 2009, 23:46:32 EST »

rwik is arguing from intent rather then immediacy.

Because the government will not be keeping the debt it doesn't have to be recorded or called "real debt".  I'm not sure I buy it because I don't think that the future is that laid out, but if it was certain to be secured in that way, it would be un-neccessary for the government to step in as private money loves certainty.

I understand where he's coming from, and ideally it wouldn't be recorded as debt because the government would have balancing common stock in the companies (but they don't, because that would require a stockholder buyout package).

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rwpikul
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« Reply #24 on: February 28, 2009, 03:12:45 EST »

Asked and answered:  The £1.5 trillion number is in and of itself misleading for several reasons I have already pointed out.

It is possible for a statement to be both true and misleading, thus pointing out that a statement is true is not a defence against a claim that the statement is misleading.
I don't think that the statement is misleading at all.  Why do you think it is misleading?  You have said that the "that the $Big Number$ is misleading for several reasons." What are the reasons?

The core reason it is misleading is that it is presented as the focus of the statement while lacking key pieces of context.


The debts aren't 'real' public debts, they only appear on the overall public books due to accounting technicalities, (and rather iffy ones at that, GAAP here would have those debts kept at arms length).

The debts come with assets that are not mentioned.

The debts are not lasting, and will almost certainly be severed in the future.

The headlines speak to the increase in public debt, when no debt is actually being created.


Heq:

The British government currently owns almost 70% of the Royal Bank of Scotland and 43% of Lloyds Banking Group, (the banks who's debts are at issue WRT this big number).  They _did_ get stock in exchange for the bailout.
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« Reply #25 on: March 02, 2009, 06:31:58 EST »

Asked and answered:  The £1.5 trillion number is in and of itself misleading for several reasons I have already pointed out.

It is possible for a statement to be both true and misleading, thus pointing out that a statement is true is not a defence against a claim that the statement is misleading.
I don't think that the statement is misleading at all.  Why do you think it is misleading?  You have said that the "that the $Big Number$ is misleading for several reasons." What are the reasons?

The core reason it is misleading is that it is presented as the focus of the statement while lacking key pieces of context.
The context though is mentioned in the articles.

The debts aren't 'real' public debts, they only appear on the overall public books due to accounting technicalities, (and rather iffy ones at that, GAAP here would have those debts kept at arms length).

The debts come with assets that are not mentioned.
Not in the headline though, but they are mentioned in the articles.

The debts are not lasting, and will almost certainly be severed in the future.

The headlines speak to the increase in public debt, when no debt is actually being created.
No debt is being created.  But debt was transferred from the private sector to the government books.

No debt is lasting, it can be paid off.  The problem is though is the coverage the assets provide for the debt.  How much of the debt will they provide for and how much will be borne by the taxpayer?
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Medivh
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« Reply #26 on: March 02, 2009, 18:32:23 EST »

Unless you're talking about Northern Rock being an asset, there are other options.
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« Reply #27 on: March 03, 2009, 06:25:19 EST »

Unless you're talking about Northern Rock being an asset, there are other options.
The UK government fully own two banks, Northern Rock and Bradford & Bingley.  They own ~70% of Royal Bank of Scotland and ~43% of Lloyds as rwpikul mentioned.  Each of these banks have assets and liabilities.  The assets are mostly the mortages they have on their books.  The liabilities the loans they have taken from other banks and savings accounts.

The information so far indicates that these banks will make losses in the next few years because their assets are not particularly good.  These will be losses to the taxpayer.

There are some other option than the taxpayer covering these losses.  The banks may make a profit from their operations that will cover some of the losses.  They may also put the banks into administration in which case those who have lent to them will take the losses, it's very unlikely they'll do that after nationalizing them though.

The situation varies from bank to bank.  Northern Rock has already made a large loss and will probably do the same next year, B&B will almost certainly do the same.  RBS and Lloyds may not do so badly.
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rwpikul
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« Reply #28 on: March 03, 2009, 09:25:51 EST »

Asked and answered:  The £1.5 trillion number is in and of itself misleading for several reasons I have already pointed out.

It is possible for a statement to be both true and misleading, thus pointing out that a statement is true is not a defence against a claim that the statement is misleading.
I don't think that the statement is misleading at all.  Why do you think it is misleading?  You have said that the "that the $Big Number$ is misleading for several reasons." What are the reasons?

The core reason it is misleading is that it is presented as the focus of the statement while lacking key pieces of context.
The context though is mentioned in the articles.

IRRELEVANT

We are talking about the headlines

That the article _corrects_ the misleading headline does not change the fact that the headline is misleading.

Quote from: Current
Quote from: rwpikul
The debts are not lasting, and will almost certainly be severed in the future.

The headlines speak to the increase in public debt, when no debt is actually being created.
No debt is being created.  But debt was transferred from the private sector to the government books.

The word public is there for a reason.

Quote from: Current
No debt is lasting, it can be paid off.  The problem is though is the coverage the assets provide for the debt.  How much of the debt will they provide for and how much will be borne by the taxpayer?

Not lasting as in they go off the public books when the banks are placed back in private hands _even if the debts still exist_.


Now, I'm done with this smokescreen digression.

Libertarians and Marxists, the exact same argument style, only differing in their utopia.
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« Reply #29 on: March 03, 2009, 12:21:29 EST »

Asked and answered:  The £1.5 trillion number is in and of itself misleading for several reasons I have already pointed out.

It is possible for a statement to be both true and misleading, thus pointing out that a statement is true is not a defence against a claim that the statement is misleading.
I don't think that the statement is misleading at all.  Why do you think it is misleading?  You have said that the "that the $Big Number$ is misleading for several reasons." What are the reasons?

The core reason it is misleading is that it is presented as the focus of the statement while lacking key pieces of context.
The context though is mentioned in the articles.

IRRELEVANT

We are talking about the headlines

That the article _corrects_ the misleading headline does not change the fact that the headline is misleading.
By the same token the BBC headline is similarly misleading though because it doesn't mention what the others do.

How would you suggest the media present this without a "misleading" headline?

Quote from: Current
Quote from: rwpikul
The debts are not lasting, and will almost certainly be severed in the future.

The headlines speak to the increase in public debt, when no debt is actually being created.
No debt is being created.  But debt was transferred from the private sector to the government books.

The word public is there for a reason.
I see your point, it is inaccurate to call the national government's debt the public debt.  Unfortunately it has become quite conventional.  Only the Times though use the word "public".

Quote from: Current
No debt is lasting, it can be paid off.  The problem is though is the coverage the assets provide for the debt.  How much of the debt will they provide for and how much will be borne by the taxpayer?

Not lasting as in they go off the public books when the banks are placed back in private hands _even if the debts still exist_.
The government can only sell these banks if they are viable businesses.  They can only them if their assets outweigh their liabilities.  Currently they don't for many reasons.  The government must cover this shortfall.

For example.  The debts involved are £1.5trillion, if the assets are £1.2trillion then the taxpayer will have to cover the £300billion shortfall.  If the assets are £1trillion then the taxpayer will have to cover a £500billion shortfall.  The latter is probably about the size of the problem.

Libertarians and Marxists, the exact same argument style, only differing in their utopia.
What exactly is wrong with my arguing style?

What you seem to be arguing here is that the taxpayer is being screwed, but that it is perfectly fine for the BBC to not mention it.
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