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Any Economists on BC? I need your help with this!

Posted by iratedog • 10/12/09 • Subscribe to this Discussion [RSS] • Report This Topic
Topics: assets, economics, gordon brown

My Prime Minister, Gordon Brown, has just unveiled plans to reduce the rising budget deficit by raising £16bn from the sale of assets.

Now, the opposition are largely in favour of this, but say it's not a substitute for long term solutions, and the Lib Dems say they're selling into depressed markets and so will get lower rates.

My question to any economists here is this: Won't selling our country's assets stunt future growth later on? I was under the impression that you should have a good number of assets from which to earn interest etc.

Am I wrong in this? Will selling a portfolio of assets help our financial situation?

Baring in mind that I don't know anything about economics, but this is what I thought...

User Comments

10/12/09

polybore

You can look at it this way. Thatcher sold off the family Siver and now Labour intend to have a garage sale to sell off the odds and ends left over.

This sale of assets will not stunt growth later on as growth will come from the private sector not the public sector.

[reply]
1. 10/12/09
  
  tonytovar
  
  I agree poly. Also keep in mind that 16bn is nothing compared to what it takes to run a nation. Its chump change. 3% of the US is owned by kuwait, having a few trillion dollars vested. This will not hinder growth; if you think about it a second, this could possible fuel it.
2. 10/12/09
  
  iratedog
  
  ok. so assume for a moment neither thatcher or brown sold/will sell off assets - what would those assets be doing normally? What's the point in having assets? What's their purpose?
3. 10/12/09
  
  tonytovar
  
  Honestly, it could be anything from information to land. assets are usually income baring or equitable resources. It really depends, have you noticed them pointing out certain types of assets? The US very rarely sales land to foreign countries but it does borrow a whole lot which is another way of a foreign country having vested interest in US assets. Lets say, the dollar sux then you'd want to invest your money in a peice of land here in the US with hopes that when the tables turn you would have easily made a profit on your land once the dollar has gained strength again. Same concept, if I know the dollar is or will be getting weaker I would buy foreign assets, I have a place holder for my money and can gain from the decline of the dollar when profit is made. It just all depends on the circumstance and the types of assets. Its all really just paper in the end.
4. 10/12/09
  
  iratedog
  
  Gordon Brown gave examples like: The Dartford crossing, the cross-Channel rail link, the nationalised bookmaker "the Tote", some government real estate, the Channel Tunnel rail link, the Student loan book and the government's 33% stake in Urenco (a European consortium which supplies equipment to enrich uranium for the nuclear industry) to name a few.
10/12/09

tonytovar

so they are just selling for stakes, land, and student loans. Well, sounds to me like they are in need more so than selling for the sake of mere fund raising. There are other assets that are probably worth a whole lot more that the govt is gaining interest from than the above listed though. I would not worry about them losing on this one. Its just a bake sale of a few sweet to fund raise.

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