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Inflation tends to wipe out debts becasue it's usually followed by wage rises, whereas default tends to make debts worse as there's less money in the system. That's why governments generally prefer inflation, though with government debts at this level blatant inflation could result in bond yields rising high enough that you'd need the entire government's income just to pay the interest.

As I understand it US money supply has massively inflated over the last couple of years but the Fed has sucked up much of that new money to ensure that the banks can't lend it out and cause price and wage inflation. Reversing that situation will be exciting, to say the least.

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Most annoying. Have Bloomberg switched the link off now? It won't fire on my laptop?

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I can see it now. My mate who just opened his old fashioned sweet shop in Hitchin, Herts has timed it just right as Cadbury have been acquired by Kraft Foods. He should be able to seize this opportunity to expand and replace the void created by this and become a multi-million if not billion company in the near future. His success will replace the millions in tax revenue that may be lost if Kraft ever move headquaters / production / etc from the UK.

If you sell off your crown jewels (& with their existing performance and perhaps more importantly the emerging Indian market place that Cadburys was a major player in they definitely meet that critera) all you maybe left with is costume jewelry which whilst looks nice is nowhere worth the same in value. I believe it will have repercussions on future generations in the UK which will have implications on UK currency.

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You think the government should have stepped in and stopped the sale of one privately owned company to another one?

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Nope I think that it is a shame that we sold our crown jewels (i.e. Cadbury) for short term gain - an example (& I keep it simple for you) is that we could all sell all of our assets and be cash rich now but what does that bode for our future when we have spent what we received. In my opinion Cadburys with the emerging Indian market is worth far more in the future than it was now - Kraft agreed with this otherwise why would they have purchased it?

Everyone was on Gordon Brown's case for selling the gold which is a similar scenario of selling an asset which would have been better to hold on to in the long term.

Coincidently do you think that if the UK government had of stepped in they would have been the first one to do so? Or have governments of other countries stepped in to stop a private company being sold to foreign companies?

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I think the UK government have made it far to easy for foreign companies to aquire UK companies without the arrangement being reciprocated. Just look at the water and power utilities mostly owned by French/German companies but those markets completely closed to foreign companies. The way the City financiers can take a short term gain on a takeover may be good for the banks and their bonuses but it's unlikely to be good for the UK as a whole in the long run.

I expect in the nuclear power station build programme UK companies will be left with the crumbs from the table as effectively it has been outsourced to the French government. Ironic as I think the UK was the first country to put power into the grid from a nuclear power station back in the 50s.

Cadbury were already moving production to eastern europe anyway. In a way its suprising that Cadbury should allow themselves to be taken over by such a "lowest common denominator industrial slop" producer as Kraft but I'm sure its in the financial interest of the Cadbury directors to make the deal also.

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But cadburys was a private company. It wasn't one of 'our' assets - unless you owned equity in the company that is. If you are trying to say that for most people jam today is better than jam tomorrow I will agree with you. But to an extent that kind of short termism is just human nature.

Do you know how kraft finance the purchase of Cadburys (this is a genuine question, not trying to trick you)? They could have simply made the decision to purchase based on current yield rather than projected growth.

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There is definitely a case for certain 'essential' things to be protected (power, water etc). But if the SHTF these assets can just be seized (as happened with the assets of icelandic banks).

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In principle there's nothing wrong with that. The real money is to be made in selling people things they want and can't get elsewhere, which generally means high-tech items which other countries can't produce... chocolate is not in that category.

The problem is that the British government have made setting up a new high-tech business in the UK prohibitively expensive and run down the schooling system to the point where there are few people capable of doing the work. They've also provided companies with large incentives to move work abroad, such as planning permission which makes the land their factory is on worth far more than the business as a going concern... you can sell an old factory in the UK to a property developer and make more than enough money to build a modern factory in Eastern Europe where wages will be lower.

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When I talk of it as an asset, I speak of the income that it brings in for the UK market (i.e. government, pension schemes, employment, etc). If we have no control as a country over the private companies and they all up and leave the UK there is no base left to build on.

I don't think that it is just the government; I think it is a failing in the British approach. We look at the short term rather than long term in most instances. It is evident in most areas of society. Whilst off at a tangent, an example that comes to mind is how well the Germans did in the World Cup with such a young team whilst we did so poor. They built for the future whilst we relied on the present (or as it become apparent by their performance) hopefully the past!

My understanding (and I stand to be corrected) is that Kraft looked at both projected growth in the short term and the long term. The emerging markets of India where Cadburys have a good foothold was particularly appealing to Kraft. That been said, I am not privy to the inner dealings of Kraft and as such my understanding is conjecture based on the info I have digested. Even if Kraft announced either way, do companies ever tell the honest reason why they made a decision at the time they takeover another company? In my experience and I have been involved in numerous takeovers as “hawk and prey”, you only find out with the benefit of hindsight. Good to Great by Jim Collins gives a good insight into different companies approach and reasons to takeover along with other issues and is worth a look.

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Do you know how Kraft paid for Cadbury? Was it just cash for the Cadbury shares or cash and Kraft shares? I generally think takeovers where shares are issued are dodgy. I remember there being a huge fuss in Germany a few years ago when Vodaphone took over a big German company by issuing shares.

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Ultimately, the only way the state can gain the control you want to see is to enact legislation to limit the freedom of private companies to do business with each other. I can't work out if you are suggesting this or not.

The way I see it is that if Cadburys leaves then other companies will take it's place. And if another company doesn't take it's place then the people will just have to find other ways to be active in the economy and the government can tax that instead. There is no finite number of private companies and jobs which once leave cannot be replaced - it only looks that way because the government interferes too much rather than not enough.

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While I generally agree, it's hard to make long term decisions when the government can change the rules tomorrow; for example, cutting interest rates to 0.5% or raising them to 10%, doubling or halving the minimum wage, or suddenly preventing you from selling that company you've spent twenty years building up from nothing becasue the buyer is a foreigner. You wouldn't bother thinking fifty moves ahead in a game of chess if you knew the rules might change to draughts five moves later.

And it's even worse when the government bail out failed companies; there's no incentive at all to think about anything other than short-term profits when you know that the taxpayers will be on the hook to pay for your long-term failures. Lend money to people you know can't pay it back, rake in the short term profits, take your big bonuses and you can retire before the long-term arrives.

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I didn't mean that I want the state to do that -I honesty believe that if the company is built to last then the owners are not really interested in short term gain but will look at the medium to long term. There are example of companies that have fought off takeovers and thrived but Cadburys management took the money and ran.

Your vision that that "if Cadburys leaves then other companies will take it's place" and that "if another company doesn't take it's place then the people will just have to find other ways to be active in the economy and the government can tax that instead" is without a doubt naive. It is like saying that if we rape and pillage a community it will never reach a point where it is just too damaged to recover. The fact is that there are companies like Cadburys whose performance (both positive and negative) have a major influence upon UK economic landscape. Another such company is BP who virtually ever pension fund has shares in (See link http://www.independent.co.uk/money/p...s-1989503.html). I suppose next you’ll will say that if BP was lost or went bankrupt, there would just be a minor blip on the UK economic landscape whilst a few people on the Dragons Den put forward the next thing to replace BP. :p

The days of major players such as Cadburys being absorbed into foreign companies and then pheonixs rising from the flames to replace the quantum that they contribute are well gone. Whilst inovating companies such as Dyson help they do not replace all that has been lost; they just help reduce the deficit caused by the void that is created by the loss of the former.

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Hmm, I would say naivety is expecting the owners of private businesses to act out of anything but self interest unless they are forced to do so. I concede my point was simplistic and brushes over the pain and misery caused by parts of the natural economic cycle. It does, however, describe exactly the economic system the west has adopted given that we aren't communists. (In your rape and pillage example, I wouldn't expect the community to survive, I would expect the individuals in that community to act in their own interests and either move somewhere else or toughen up and fight them off)

BP? Well I guess you can't debate foreign ownership given that they are multiply listed and are actively seeking investment from the middle east. If they went bankrupt, many pension funds will be short of cash and a fair number of people would be a bit poorer as a consequence. So what? It's tough for them, but there shouldn't be such a thing as a risk free return. On the global scale (which BP operates in) another company really would take their place and pension funds will invest in that instead given that the oil is still there and people want it.

I'm getting the impression that you think the government should do something to stop companies like BP going bankrupt or cadburys being sold to swarthy foreigners, but you haven't yet clarified in your own mind what exactly that something might be. Or maybe you have, in which case I'd be interested in what you think the solution is.