UKC

Now theres a headline with an oxymoron in it.

http://www.bbc.co.uk/news/business-35780703

In reply to Gone for good:

Osborne's love of austerity isn't proving to be a roaring success?

In reply to Timmd:


Then why is Labour chasing the same policy? Nobody "loves" austerity, but a majority of the population understands there is no magic money tree.

In reply to BnB:

Unless by a miracle we managed to grow the economy, in which case we'd have more tax money to pay back our debts / invest in services (delete according to taste)

Fact is that for all the time George spends in a hi-viz vest and shiny new helmet, the economy is not growing as he forecasted

In reply to Andy Hardy:


Er, when did the economy ever "grow as forecasted"??

In reply to Gone for good:


I'll be intrigued to see how he is going to raise health spending and reverse welfare cuts + without a deficit on current spending. Trident (aka,the magic money tree)?

In reply to Timmd:


Not a roaring success but we have had modest growh while he's been chancellor

http://ec.europa.eu/eurostat/tgm/table.do?tab=table&plugin=1&langua...

More than that in the current climate and I be worried we were heading for another bust (which we might be anyway).

Never voted Tory, not happy about inequality, but misrepresenting the economy has been a problem for the left while in opposition.

In reply to Postmanpat:

If nobody can predict (reasonably accurately) how the economy will perform over the next 12 months, then why bother making predictions, announcing them in the house of commons, and basing future spending on them?

In reply to BnB:


The (entirely mundane) money tree does seem to produce more fruit when it's watered a bit, though.

I'm not even remotely convinced the government has the balance right.

In reply to BnB:

Yet the " magic money tree " flourished for the banking sector...

In reply to BnB:


Labour's proposing something quite different to Osborne's plan here.... they are going heavy in the fiscal credibility stuff because the majority of the population has, like you, been duped into thinking that the economy's like a credit card, and anything but trying to run a surplus is magic money trees.

In reply to Andy Hardy:


err.... how else would you plan future spending?

In reply to Mike Stretford:


*face palm*

Unless you start before a recession, you can take pretty much any six year period and you'll have at least modest growth. Osborne started at the bottom of a recession. His saving grace is that Europe's had even worse economic policy.

In reply to Donald82:



So you will have growth unless you don't have growth. Thanks for that insight!

In reply to Donald82:

Let me get this right, you'd plan to spend based on a prediction that's fanciful knowing that, in all likelihood, the economy will fail to deliver the tax returns you've committed to spending?

In reply to Donald82:

Are you about to tell us that to run a surplus , the non govt sector has to borrow? and this is bad because all countries that run a surplus are basket cases? (Like Germany and Norway)

In reply to Gone for good:


It's actually based upon the work of Simon Wren-Lewis. It is highly credible of McDonnell to have sought such guidance and brings him closer to the thinking in the OECD and of the IMF's economists about what needs to be done when interest rates approach zero, inflation flatlines and demand-side requires stimulation.


http://mainlymacro.blogspot.be/2016/03/a-much-better-fiscal-rule.html

In reply to Donald82:


I'm not sure how you deduce that from my fairly neutral observation.

For more than 20 years I've been the owner of a £multi-million international business, prior to which I ran someone else's company for them. It's not inconceivable that, through these enterprises, I have contributed more to the UK's coffers in every one of the last 20 years than you will in your lifetime. What makes you so confident of your ability to assess my economic literacy?

In reply to BnB:

You are Donald Trump and I claim my £5.

(Just to add, running a business is not like running an economy. You'll still likely be subject to the Household Economy Myth. Nation States are not households or businesses).

In reply to Donald82:

Apart from Japan and Europe (nice contradiction in your post). The US has done better but they are the worlds super power and had the shale gas boom. You can *face palm* all you want but annual 2% is reasonable. Any more from the UK and it would probably be unsustainable.

Sounds like you're craving a boom.

In reply to Shani:

You'll have to work for it, laddie


Really. I'd never have guessed. I suppose if I were bright enough that I didn't have to invest my efforts running corporations year in year out then I'd have realised that sooner. Thank you for opening my eyes.

PS I liked the Trump comment. It was funny.

In reply to Gone for good:

Surely Labour's big challenge is to first convince the electorate that:

- Labour was not the cause of the 2008 crisis
- National finances do not work in the same way as household finances, and a deficit is not something to be avoided at all costs
- The economic recovery is not nearly so strong as the Chancellor claims
- The 'benefits culture' is not nearly so pervasive as the media claims
- Government cuts do not amount to a 'long term' economic plan but short-termist savings, while leaving the country less resilient and the poor and vulnerable worse off
- Borrowing to invest in industry and infrastructure is how a healthy economy operates
- Inequality is bad for all of society since more disposable income is good for businesses and results in higher tax takings

In reply to Shani:


This is clearly the current meme for those who object to Osborne's approach. While obviously there are substantial differences, fundamentally, if the government spends more than it raises in taxes in the long term the result is pretty similar to that for an individual or household.

In reply to Shani:

It is highly credible of McDonnell to have sought such guidance and brings him closer to the thinking in the OECD and of the IMF's economists about what needs to be done when interest rates approach zero, inflation flatlines and demand-side requires stimulation.


Theres nothing credible about McDonnell.

According to a report in The Times published in November 2015, McDonnell in 1985 made similar comments at a Labour Committee on Ireland meeting, before the start of the Northern Ireland peace process. The Deptford Mercury asserted at the time that McDonnell had suggested there was a role for "the ballot, the bullet and the bomb" in bringing about a United Ireland, and joked about "kneecapping" the "gutless wimp" Labour councillors who had declined to join the meeting.[15]

The only thing you could look forward to under his management of the treasury would be much higher taxes, much higher public spending, much higher debt and much higher borrowings.

In reply to BnB:



You are forgetting the big difference between you and the government.
You run a business (as do I but only 800k business). Now I am willing to bet that like me you need to make a profit or you will go under, if you have done it for 20 years you like me are looking at longterm profit. Every decision you make is based on what is best for the company and every bit of capital investment you make is carefully studied and planned to maximise the return on that investment.
Finally I am willing to bet you have cut any dead wood free over the years.

The government on the other hand only look at things in blocks of election years. Do the unpopular stuff in the first few years then throw a few bones back towards the end and hope to get in again.
If they don't sort things out they just say "it's the economy" and borrow a few more trillion.
No matter how good or bad the fiscal police is the other side will slate it and if the other side get in power then the new opposition will slate everything they do.

On top of that there are all these armchair economists who apparently know how to fix the economy but instead of joining the local party and working up to Chancellor or the Pm they just talk about it on the Internet.

In reply to Dax H:
Good points and you highlight some valid differences there which clearly apply when you are taking about privately owned businesses. However, for 4 of the last 20 years my business was a stock market listed plc (back around the turn of the century) and instead of thinking long term, we were obliged to satisfy our "electorate", the pension funds and banks who were our shareholders. Then decisions had to have an instant (<1 year) impact, rather like political choices and this pressure resulted in much borrowing to fund unnecessary acquisitions, which i opposed at the time.

It was a huge relief to return the enterprise to private ownership but many interesting lessons were learned. I at least gained insight into the possibility of becoming as economically literate as those further up the thread who've had the benefit of more spare time to master macro-economics.

In reply to BnB:
" of the last 20 years my business was a stock market listed plc" "It was a huge relief to return the enterprise to private ownership "

Surely not Alliance Boots?

In reply to Bjartur i Sumarhus:

Goodness no. I'm a happy taxpayer.

In reply to MG:


No it is not. You have fallen in to the Household Myth here. A household cannot influence interest rates. A household cannot print money or engage in QE. A household cannot devalue its currency. A household cannot borrow on the bond market.

Interestingly, the UK can borrow more cheaply on the Bond Market now than at any time in its past.

How do we expect the UK to redevelop its roads, rail, power generation and distribution and other assets of infrastructure? If you say "from taxes", then, as tax returns are diminishing, we are in an inevitable spiral of decline. And once infrastructure crumbles, this will have a knock on impact to business and private investment. Do you see the folly of your position now?

In reply to MG:


So.... it's stupid the mention Osborne's modest growth as a good thing.

In reply to Shani:

As I said there are differences (although some of those aren't really difference - households can borrow, for example) but the point is if a country devalues or over-borrows, the result is poverty, as for a household. There is no fundamental difference. It's not a myth, or even a Myth.


Roughly, by investing in sensible things (education, infrastructure etc) at a sensible, affordable level. My like a household has to do to thrive.

In reply to BnB:

No, there is no magic money tree, but with the direction in which things are going globally with a need to 'green up', the UK could be investing in development technologies and expertise ( and infrastructure here too - creating jobs through it's development) related to that, so that we can have products and skills which other people would want to pay us for. This government is doing the direct opposite. If you look at what other countries are investing in domestically, and then look at the UK, one can only wonder at why we're reducing our investment where others are increasing it. We were on the verge of braking new ground in carbon capture and storage, for example, until funding was cut.

This is a stupid government to do with letting the UK lose the lead, where it could be something else contributing to the UK economy.

In reply to Gone for good:

Higher taxes are not a problem if they are targeted.

Much higher public spending is not a problem if it isn't spent on something like bailing out the banking sector and instead, invested in the UK's infrastructure - which would create jobs, increase tax receipts and increase GDP.

Much higher debt is not necessarily a bad thing. It needs to be considered against GDP. For example, a billionaire would have bigger debts than you or me.

Much higher borrowings are not a problem when the cost at which you borrow is falling and at historical lows. In fact you could buy out things like those rotten PFI deals and save money for the UK over the long term.

You are right about McDonnell's unpleasant comments regarding NI/IRA, although we should perhaps view it to a degree in the context of the brutality of the British state against the Irish.

In reply to Donald82:


I don't think so. Why do you ask?

In reply to Andy Hardy:

I wouldn't base spending on predictions I knew to be fanciful. I thought you were having a go at using any prediction at all, no?

In reply to MG:


So you are now agreeing the UK should borrow to invest in its infrastructure?

In reply to MG:

*whoosh*

In reply to Shani:


I never disagreed that some borrowing is a good thing. I don't however accept that an analogy between a country's finances and those of a household has no validity. There are differences but the fundamentals are the same. Basically there is a limit to what is affordable. Pretending we can borrow willy-nilly to pay for everything we might like as a country and it will all be just fine is nonsense.

In reply to MG:


So that is a "yes" then!

"Pretending we can borrow willy-nilly to pay for everything we might like as a country and it will all be just fine is nonsense." - no one has made this claim because, as you have said, its nonsense.

In reply to Mike Stretford:

2% from the bottom of a recession is not reasonable. It's historically bad.

I'm not sure what the contradiction is? My point is that Europe has had terrible economic policy and it's correspondingly terrible economic performance makes ours appear better than it actually is.

In reply to Shani:


Yes - I don't think anyone disagrees with that.


It underlies those who repeatedly state "a country isn't like a household" to support claims that spending on <pet obsession> is obviously a good thing

In reply to BnB:

First of all well done on your business success.

Things that suggest to me your economic literacy might not be the best:

1. you think running a business/being rich gives you insight into macroeconomics (similar fallacy to the economy is like a credit card going on here)
2.you said magic money tree
3. you seem to think austerity has been a sensible economic policy
4. you seem to equate money and personal worth

In reply to MG:

So you agree with McDonnell's statement that

"[the Government] will only borrow for the long term, and that means for investment - investment in our infrastructure, in the homes that we need, the railways, the roads, the renewable energy....And in new technology to grow our economy."

In reply to Shani:



Not really. Why only long term borrowing? Why only in infrastructure? What level of borrowing - more or less than currently? How is an appropriate level to be judged?

He doesn't seem to be saying anything coherent at all, or indeed that Osborne couldn't say.

In reply to Donald82:

LOL, what's you credentials Donald?

In reply to Shani:


Yes, but you would target them at the very small number of "the wealthy" where the increase in takings is inconsequential to the national budget, rather than at the basic rate of tax which delivers massive state earnings, albeit at the expense of disposable incomes. Or am I misjudging you?

In reply to Bjartur i Sumarhus:


I've told you the first point before because it's true. I've never made the second point because, well, it's not true.

In reply to Donald82:

I'll bow to your better knowledge then. What was it you said you did?

In reply to BnB:


You are misjudging me. We have had this discussion before on another thread where I was quite explicit that I did not agree with a 'clobber the rich' approach.

In reply to Donald82:

Historically we did get spikes after a recession but they tended to lead to another dip, so a more stable growth rate might not be a bad thing. It's ok, not particularly good or bad.

Some on the left have got in a mess banging on about austerity and us still being in a recession, and that's were Tim seemed to be coming from. We haven't had real austerity and we have had modest growth......no too bad, as I said it's equality I'd disagree with this government on, but then they are Tories, to be expected.

In reply to Bjartur i Sumarhus:


I hope you are not falling in to the fallacy of an 'appeal to authority'. I suppose a degree in Modern History would qualify him an opinion on global economics?

In reply to Shani:

Not at all. BnB was quite open kimono about why and how he held his view, Donald on the other hand decided a supercilious response was the best way to bring him down a peg or two. It was funny, hence the LOL and the request to back up his stance with some creds.

If it's a degree in Modern History then that's what it is.

In reply to Donald82:

"I've told you the first point before because it's true."

Yes you have. an open economy is a simple zero sum game of Budget deficit + Net exports = Private net saving and this simple accounting formula proves that Osbornes fake austerity is bad and Corbynomics is the way forward. I think that was about it.

In reply to Bjartur i Sumarhus:


That was just a tongue in cheek comment vis a vis George Osborne's qualifications.

In reply to Shani:

Ha, fair enough.

In reply to Shani:

You did say that previously. I remember now. So where would you target them?

In reply to BnB:

For a start = against those subscribing to non-dom status, those able to leverage aggressive tax strategies, those who engage in extractive wealth practices, those whose connections mean that they can influence societal leaders (often cut from the same cloth as themselves), aided and abetted by our political classes.

Also we need to combat excessive use of debt as a means of shifting profit out of the UK. The UK allows generous tax relief on interest payments, which can lead to UK businesses taking on excessive debt - we need a more territorial system which gives relief only for borrowing that financed activity in the UK.

In reply to Donald82:

To answer without descending to bickering



Not automatically, but running my business does. We are constantly exposed to currency fluctuations, global shifts in commodity prices and futures, global interest rate policy, and, in particular, wars and political interventions. I also have eyes and ears.


I said "there is no magic money tree"


The highly literate Christine Lagarde and the IMF seem to think so, within reason. And I would concur, within sensible limits.


No. I simply didn't take kindly to your dismissive tone and I responded intemperately.

In reply to Gone for good:

I don't get this borrowing lark. I normally balance my deficit by stealing money.

In reply to Shani:



I don't like cheats either, but a justified reassertion of fairness won't raise more than a drop in the ocean. Where are the big tax receipts?


Are you saying you'll tax people for having connections?

In reply to BnB:

No. When you said "You did say that previously. I remember now. So where would you target them?" I cut and pasted from my initial response. My bad.

However, when I talk of "those whose connections mean that they can influence societal leaders (often cut from the same cloth as themselves)" - that demographic would be subject to a policy of transparency; we need to cut down on the revolving door between the Big 4 accountancy firms and HMRC in particular, but also between government and big business. The Advisory Committee on Business Appointments is a toothless joke. I'm with you on your views about 'cheats'!

On the issue of big tax receipts, the leaked documents from HSBC's Swiss banking arm indicated that hundreds of thousands of people across the world were given help to conceal millions of dollars of assets. HMRC has been sitting on a list of 1,000 UK tax evaders for five years, yet only one person has been prosecuted.

According to the BBC the tax gap for April 2013 rose to £34bn (this figure includes £14bn in uncollected income tax, national insurance and capital gains tax, and £12.4bn in uncollected VAT). Several agencies put a figure of around £1.2bn on deliberate fraud on the part of benefit claimants for 2012/13. For the same year, the FT says tax evasion (the illegal act of deliberately hiding information about your finances to reduce your tax bill), amounted to £4.1bn.

This government has slashed the number of employees and funding of HMRC.

In reply to BnB:

Surely there's a fairly large amount of corp. tax which is avoided through having to pay licence fees to off shore holding companies for use of IP? Last year I had to cough up more corp. tax than facebook, and I only employ me.

Whilst I fully accept that companies should not pay 1p more in taxes than they legally have to we have to stop this particular practice.

In reply to Gone for good:

In terms of public spending the issue that most concerns me is the insane amount that is committed in PFI contracts. This is like getting a mortgage with WONGA! All major political parties have supported this system is financing vital public services and non of them talk about it. Their reverence for the terms of business contracts is hollowing out the finances of those services we all depend on. Until they engage on the issue I'm not inclined to givecany of them any credabily.

Sorry, rant over! I'll go back to treating the sick...

In reply to Removed UserDeleted bagger:
I agree 100%, Osborne said it was nuts (words to that effect), and has then carried on because it'll make his official figures look better and allow him to 'clear the deficit' by the end of 2017(?) when he won't have done really. According to Private Eye.

In reply to Andy Hardy:


Of course. I don't think there's any disagreement. But fixing inequities in the tax system isn't the same thing as raising tax receipts to a level that would free up spending. There are very few multinationals and not a huge number of high net worth individuals, a good proportion of whom already pay their fair taxes. Yet there is a vast number of basic rate (and indirect, eg VAT, fuel tax) taxpayers who would need to be targeted if receipts are to be significantly boosted. Some would argue in favour of borrowing to provide investment, others have advocated taxation. I'm just trying to challenge advocates of the latter to recognise this mathematical truth.

In reply to Shani:


It does seem counter-intuitive. Thank goodness they're not cutting police spending.

In reply to BnB:


You sure about this? Andrew Dilnot (UK Statistics Authority), has said the police faced a £160m real-terms cut in their Whitehall funding in 2015-16 and 2016-17 (despite Osborne’s claim to be providing “real-terms protection” for the police budget).

In reply to Shani:

I'd hoped a smiley wasn't needed. Someone's given me a "like" which hints that the irony wasn't too deeply buried.

In reply to BnB:

I'm an economist

In reply to Mike Stretford:

Historically after recessions we've returned to trend growth. Modest growth after a recession is bad.

In reply to Bjartur i Sumarhus:

c-

In reply to Donald82:

I'm an "economist"

Ftfy.

In reply to BnB:

I suspect your job doesn't give you as much macroeconomic insight as you think it does.

Yes, saying there's no magic money tree is the kind of thing that the economically illiterate like to say.

I think this summarises the IMF's view on austerity. http://www.voxeu.org/article/don-t-sweat-debt-if-fiscal-space-ample

Using the amount of tax you pay or money you have to try and win an argument or confer some kind of authority upon yourself is plumbing the depths. I'm a little bit embarrassed for you.

In reply to Sir Chasm:

Lolz, have a like

In reply to Donald82:


there are people who are clever enough to make money and there are people who only talk about how other people make money. Not sure who is better than who, but I know which one I'd rather be!

In reply to BnB:


I was going to interpret this as tongue-in-cheek, but wasn't 100% sure. Apologies.

Ironically I've picked up a dislike even though it is Dilnot attacking Osborne's claims, not me - a claim Osborne stated without a hint of irony himself!

Such is the Daily Mail wing of UKC.

Have a good weekend BnB.
Cheers,
Christopher

In reply to Donald82:

in what area is your expertise? Do you work in the private orpublic sector.

In reply to Donald82:
I acknowledged earlier my initial overreaction. I took the wrong line to demonstrate that you had no right to make assumptions about my experience of economics. And I hold to that view from a unique position. Only I can know what I know. Which is kind of the point.

Your views are as valid as any other, but your repeated imputations. that those who hold opposing views must be less perceptive than you, undermine your arguments and cast doubt on your own insights and knowledge. I'm sure you're smarter than that.

Have a good evening

In reply to Shani:









Cheers. You too

In reply to neilh:

public sector. not in macroeconomics.

In reply to Donald82:

Trend growth is 2.47%, might be marginally below that but not much. Your *face palm* is looking a tad over dramatic

http://www.tradingeconomics.com/united-kingdom/gdp-growth-annual

In reply to Mike Stretford:

I mean getting back to where we'd have been if trend growth had continued instead of having a recession. You have to go faster than trend growth to get there.

This chart illustrates the point. http://www.economicshelp.org/wp-content/uploads/2012/11/GDP-real-quarterly-... After a recession you normally have a period of faster growth which gets you back towards the black line. The chart only shows until 2012 but we're still nowhere near getting back to the black line.

Face remains firmly in palm.

In reply to Donald82:


you make a presumption that the recession is over, rather than it being a longer more undulating recession, perhaps the past 7 or so years are just a slow slide towards a bigger depression. Many of the problems haven't been solved, many people and countries are still debt fuelled etc.. the signs aren't good. The ECB slow to the race as ever tried a few more panic measures yesterday, pretending it was all under control.

If a real depression hits, people might be thankful that the UK has been trying to scale back the spending a little.

In reply to Donald82:


This was not a "normal" recession and comparing it to past events is questionable economics. Not only was 2008 a cataclysmic global financial shock so unprecedented that only the Great Depression of the 1930s merits comparison, but the causes, circumstances and extent of the crisis were so widespread as to feel like an existential threat to western capitalism. My company went overnight from doing business in 36 countries to having only a functioning home market, temporarily at least. Of course you've dismissed the relevance of my business experience, so let's focus on the fact that just as western economies recovered a degree of confidence a couple of years later, the Eurozone crisis blew up and a market representing some half of Britain's international trade was thrown into further turmoil. As an "economist", you'll understand that trade partners are important for growth and the collapse in European confidence was and remains a significant headwind for the UK economy. Moving forwards another couple of years, the prevailing global economic narrative of the last 18 months has been the slowdown in growth in China. This doesn't just affect demand from China for UK goods and services, rather worries about global demand for a while range of commodities, most notably, oil, have precipitated a collapse in commodity prices which has sent shockwaves through stock markets and shattered confidence across the globe. Frankly it's a surprise that the UK has shown and continues to demonstrate such stable, if mundane, growth for the past few years in the face of these challenges. If you were 20 or 30 years older and could add experience to your theoretical understanding, you might be bloody grateful the picture is not a great deal worse.

In reply to Donald82:
Well that about sums it up for me. It's like a turkey voting for Christmas.

In reply to BnB:
100 % spot on. very well put.

In reply to Donald82:


Ok you're talking about output gap. I made the mistake of thinking you meant trend gdp, when you mentioned 'trend gdp'. Here's the page where your graph came from

http://www.economicshelp.org/blog/6040/economics/what-is-the-uks-actual-out...

With output gap things get a bit more complicate, as you have to take into account the pre-crash economics, and the severity of the crash. If you look at the long term trend (inflation adjusted)

http://webarchive.nationalarchives.gov.uk/20160105160709/http://www.ons.gov...

the pre-crash growth is steeper than trend, and the crash steeper and deeper than previous ones. This points to unsustainable pre-crash growth before the crash...... no political points there as the Tories would have done the same.


That's no way to spend a Friday night Donald!

My main point is it's a false panacea for the left to expect a few years of above trend growth to pay for increased public spending, its unsustainable. If we want a better health service and more opportunities for the deprived young, we need to pay for it with taxation. Scandinavian economies show this can be done, and personally I would be in favour of it.

In reply to Mike Stretford:


I thought McDonnell's pledge was that borrowing would not be used for "day-to-day" spending, but for investment projects, so close enough to what you suggest above.

In reply to Shani:

Taxes take spending power out of the economy. Those that earn the most spend the most.


Here's some interesting stats.

http://www.ukpublicspending.co.uk/government_expenditure.html>

Much higher debt is not necessarily a bad thing. It needs to be considered against GDP. For example, a billionaire would have bigger debts than you or me.

Much higher debt is a very bad thing. Look at Greece. The more money spent on paying interest and paying down the debt means less money to spend.


Maybe, maybe. But interest rates go up and down and the UK lost its triple A rating some time ago.


Yeah of course it was the British establishments fault all those people were shot, blown to bits, kneecapped, robbed, embezzled, tortured.

In reply to MonkeyPuzzle:
Yeah sure, that might work, depends on how the lenders react. Osbourne's fake austerity has been a success in terms of keeping borrowing costs down, so it would come down to how the market's react to stated spending policy from a left wing government. It is actually what Osbourne has been doing since 2012 so it comes down to scale (historically we are still running a high deficit)

McDonnells problem would be you'd expect a left wing government to increase day to day spending too, so it would be difficult to persuade the markets spending was so neatly compartmentalised.

In reply to Gone for good:

An interesting interview with John Macdonald on The Today Programme this morning. In order to restore Labours fiscal credibility he told us that he will "plan" the economy for economic growth. Pity nobody else ever thought of that and he was a bit short on what his plans will look like.
When pressed by John Humphreys on what he would do if his "plans" didn't quite work out, would he raise taxes or cut spending he helpfully told us he would "plan" the economy for growth, so no dodging the issue the there.
Now for all I know John Macdonald my well have stumbled upon the magic panacea to all our economic woes, but if he wants to restore his party's economic credibilty he's going to have to explain it a bit better than he did this morning.
I've tried to find a link to the interview but can only find a short clip in which he says everyone on the left and right think his plans are great, perhaps the full interview will appear later?

In reply to MonkeyPuzzle:
Exactly. I can't stand McDonnell (long story relating to having to deal with the trouble caused by the revolutionary trots he has given support to) but he seems to me be be proposing things that have genuine credibility. The line is broadly Keynsian (borrow and invest in recession when its cheap) which some right wing economists may not like but it's hardly bonkers. Would I trust him to implement sensible changes if elected in government... a different and more difficult story.

If macro-economics was as simple as the face value application of the grand theories then the world would be a paradise by now (unless every major government was run by Bond villans). The household budget argument being sold by Osbourne to the public is depressing ( I'm sure glad that my academic STEM field doesnt attract such simplistic political spin).

In Britain's case, some economic arguments around the subject of this almost fetishistic obsession with deficit that seem compelling to me are that governments of both shades cheat extensively. They shove public debt into off-balance sheet public debt (PFI, student loans and now grants) ; they sell the family silver cheap to solve short term issues; they stupidly cut funding to revenue collection functions at the point they should probably be doubling budgets.

In the end real growth only comes through investment in things that improve the economy... infrastructure, research, new technology, new services, access to new resources etc; we certainty have room for improvement here. The British economy seems unbalanced: too service and finance oriented. We seem to have way too much private debt (few blame the people as much as the govenment) and where we have savings (or debt) too much of that ends up in housing (that looks worryingly to me like a bubble based on scarcity) and not enough in growing SMEs. We treat workforces as disposable rather than assets and then wonder that productivity falls. Our "markets" in many private sector areas (esp. energy and rail) dont work and forced "markets" in areas of the public sector look like expensive luxuries. We have a young generation who look to bear the brunt of it with disposable wealth and equality measures clearly in decline. It would be good to see more focus and independant examination on these structural issues. We even teach this stuff to our A level economics students but the general public seem broadly clueless.

In reply to MonkeyPuzzle:


He added a clause in that if interest rates were low, that borrowing for day to day spending would be ok, such as now. The devil is in the detail, or missing from the headline.

In reply to Offwidth:

As a person who runs an engineering business I do take issue with this view that the finance and service sector is "bad". The days of the manufacturing sector even with investment of generating vast jobs have well and truly gone. Investing in things like biotech etc is fine or satellites etc etc, but the harsh fact is they generate few jobs.

Personally I believe that the government should avoid "backing" any sector . It should step back and provide the right stable environment and leave the rest alone.

Getting big investment projects going like Hincley 2, hs3 ( trans pennine routes desperately need improving)and sorting out the London airport should be the priorities. These should be speeded up that's the sort of investment that needs to be moved forward. It's hardly rocket science.

In reply to Gone for good:


This is a ridiculous thing for you to say. The context I was alluding to stems from the influence of the famine and British colonial rule in Ireland. Talking of 'all those people [who] were shot' you might want to avail yourself of the facts of events such as Bloody Sunday 1920 when the British military machine gunned the crowd at a sports event.

In reply to Offwidth:

I agree with much of what you've written here including the comments about McDonnell.

In reply to Shani:


It was no more ridiculous than your original quote. I am well aware of the history of the British in Ireland and I served for 6 months in Belfast in the 80s. I had a grandstand view of a lot of very nasty things and trust me when I say it had bugger all to do with what happened in the 1910s and 20s.

In reply to neilh:

I have always worked in Engineering. I've been lucky enough to know company leaders from big multinationals, through medium sized family owned, down to indvidual consultants. I'm consistently told finance is broken compared to other western countries unless you are huge; loans are too difficult to obtain, there is little structural support for long term investment and too many short term pressures. Despite this there are many excellent UK manufacturing related concerns, so imagine what could be with German levels of support. Again what McDonnell says is right on this (despite the fact I dont like him and dont trust him).

Oh and for the record I never said those other sectors are bad, just unbalanced. In contrast McDonells form on this isn't good (albeit what he is saying now is much improved).

In reply to Gone for good:

I beg to differ. I explicitly mentioned context and have conceded some 'reflection' on JMcD's position. You've descended into childish 'horror top trumps' redolent of the Sun. Such arrogant bipartisanship will not lead to progress. But hey, knock yourself out.

Being a soldier doesn't give you political insight nor wisdom. In fact it probably expresses prejudice and bias. Rather than 'trust' you I'd rather trust my wider experience and knowledge of Ireland and Anglo-Irish history which includes the 70/80's as part of a wider narrative.

In reply to Shani:


Fair enough, but I was originally trying to point out that McDonnell doesn't have a lot of credibility and by trying to present himself and labour as the party we should trust with the countries finances is very easy to say and very difficult to achieve. He has got a lot more work to do on that front.


I'm not trying to claim superior insight or wisdom on the problems in Ireland and yes I probably do have a bias towards the British version of events. I don't expect you to trust me and I know that many people with wider experience and knowledge of the politics of Ireland have and will draw many different conclusions to my own.
But when you witness reckless violence on a daily basis that directly affects you it can be difficult sometimes to take a more balanced view of the situation.

In reply to Gone for good:
A gracious response. Have a like.

I'm proudly English with an Irish wife so I have my own insights. But when debate descends in to horror top trumps, the discussion cannot progress.

I have reservations about McDonnell as I've stated above, but on economics, he's brought in some very informed and respected economic advisors such as Simon Wren-Lewis and I won't let politics occlude a good idea.

Cheers,
C

In reply to Shani and Wanderer100

Oh come along you two, this is ukc, get flaming or you will have your licences revoked

In reply to pec:


You can hear the full interview here:
http://www.bbc.co.uk/programmes/b072zjpf
It starts at 1hr33mins
Its mostly bland stuff nobody would disagree with or preaching to the converted but rather light on the sort of detail which might win over doubters. In particular (at 1hr 39) when pressed on choosing between cuts or tax rises should things not go to plan he totally avoids the issue saying he will plan the economy so it will grow, sounds rather like Gordon Brown and his no more boom and bust rhetoric.

In reply to Mike Stretford:


No mistake on your part, I'm not sure what the correct terminology is I just wasn't very clear.


It was a big down turn, but growth afterwards has still been terrible. If you look at the IMF paper I've linked to above it basically says that growth could have been a lot better if we'd borrowed and spent more post crash AND that this would have been worth any extra debt/GDP. This is the same IMF that originally backed austerity and as an organisation tend to be for 'fiscal consolidation'. They've looked carefully at the evidence and changed their position. Have a read, it's fairly simply drafted.


I agree with all this, (and so do the current Labour leadership). The point about borrowing and spending more is only for the specific circumstances where we're recovering from a recession and interest rates are as low as they can go.

In reply to BnB:

Have a read of the IMF paper I linked to.

In reply to summo:


Have a read of the IMF paper I linked to above. It discusses scaling back spending now as a way of mitigating risk of future down turns.

In reply to Donald82:

and under the current low interest rates now, labour believe that borrowing and spending should increase. Living within our means day to day would only apply according to labour if rates were higher.

There has been little encouragement for the public to clear debts or save. It is them that will suffer if the real depression arrives.

In reply to summo:

Yes but Labour would borrow on the bond market. A huge difference.

In reply to Shani:


Debt is debt, there are still interest payments and it needs repaying. Bonds don't grow on magic money trees either.

In reply to summo:

You didn't read the paper did you...

In reply to Gone for good:


It depends what you do with the taxes. Those that earn the most spend the least proportionally, so if you tax them and give the money to someone else to spend, for example by reducing other taxes, you increase demand ('put spending power into the economy', if you like).

In reply to Donald82:


nope sorry, if you can't paraphrase or summarise the argument briefly in your own words, I can't be bothered chasing links and reading whole documents.

In reply to summo:


No it's not. Government debt is not the same as business debt or household debt. This is where you are going wrong. very wrong.

In reply to Shani:


It's easy to say "you're wrong", and just leave it at that. So, can you explain to us the difference please?

I think you're wrong.

In reply to Shani:

it is still debt, a government bond, however long or short term still promises to pay the lender a given amount of interest. UK bonds are low because the risk of default is low, much like the US version the bonds are generally in demand, because they are a reliable low risk source of interest income for the lender. Who pays the interest, the UK Treasury. I never said they were the same as household debt, but it is extra debt and needs repaying either way, or rolling it over and saddle future generations with it. (labour style).

So when labour says it will borrow using bonds if interest is low to cover day to day spending it is increasing UK national debt. You can re-label it and call them magic money tree spending bonds, but it is still an increase in government borrowing and increases the amount the government would spend every day, month, year servicing those interest payments on a trillion plus pounds.

In reply to summo:

it says that austerity now in order to be in better shape debt wise when the next crisis hits is not worth it.

if you're interested in this stuff and hold strong opinions on it you should really read it. It's short.

In reply to Donald82:


do the countries in Europe which were originally anti austerity, high debt look in better shape now? I think not.
It's a theory that has no evidence as yet.

http://www.taxresearch.org.uk/Blog/2016/03/13/the-conservatives-have-been-t...

Labour have a reputation for borrowing and spending but historically the Conservatives borrow more in absolute terms and oer year in office. Labour pay off more debt.

I'd like to see PFI factored in.

In reply to summo:


Yes Summo! This is answer made my evening.

In reply to Donald82:


oh, do explain?

In reply to summo:

There are (or were) other categories. What about the countries that were anti-austerity, low debt, high taxation? e.g most Scandinavian countries in the first few decades post-War.

In reply to summo:

PS. The childishly irresponsible selfish, uncaring model that now grips the western world will be our undoing, I am sure.

In reply to Gordon Stainforth:

I agree, low debt, labour isn't low debt. The Scandics fund projects mainly from income, revenue, not from borrowing although the socialist minority in Sweden would like to change that, but can't. Norway & Sweden both scaled back spending a little in past decade. Denmark, arguably highest tax in the world is looking at increasing some taxes or contributions to meet pension demands in the future. All are funding through revenue.

I never suggested there weren't other ways. Only that labour pretending that government bonds at low interest rates weren't really debt is lie. The Nordic model is that everyone is equal and everyone pays a share towards the pot, no exceptions. The UK population have this idea that only the rich elite should be heavily taxed and it is everyones right to the best education, health etc.. it's a square peg round hole scenario.

In reply to summo:

Great. I wasn't talking about Labour either, but exactly what you've enlarged on so clearly. The Nordic model. Lovely start to the day, having someone agreeing with such a deep-felt intuition ...

In reply to summo:

Total tax takes as a percentage of GDP are the biggest in Scandinavia.

https://en.m.wikipedia.org/wiki/List_of_countries_by_tax_revenue_as_percent...

But effective tax rates for the middle class are not the same thing.

http://www.theatlantic.com/business/archive/2013/01/how-low-are-us-taxes-co...

Nor are the rich suffering in the UK:

http://www.theguardian.com/money/2014/jun/16/british-public-wrong-rich-poor...

Back on topic, Keynesian economics doesn't differ in the overall debt levels (the budget balances) just the point in the cycle that the debt is taken on.... the idea is to spend at the bottom of the cycle when debt is cheaper and the growth benefits from that spending are most needed.

In reply to Offwidth:



I am curious how the 40+% figure for the bottom 10% is arrived at. Sounds very high.

In reply to MG:


Probably because it includes all types of tax, including duty on alchol and tobacco, not just income tax

In reply to Offwidth:

All very nice. We are in a period of very low interest so it all sounds good. But you only have to look at your own personal tax statement to figure that there is a flaw in all this. HMRC now sends you a letter showing you where are your tax " goes". it breaks it down dept by dept. There is also a section on " interest payments and debt". Have you seen how big it is at the moment. Have you worked out how much of your tax already goes in servicing debt and repaying it.Its pretty fightening especially when you consider that that money could go to far better services - NHS, education etc etc.

Just a couple of % points on the interest rates blows all these numbers adrift.

In reply to summo:


I missed this. Have you got a link?

In reply to Shani:


I think it was yourself, not the labour party, I'll admit they have openly said borrowing at a low rate(they didn't define low) for 'investment' is ok.

you said;

Summo> Debt is debt, there are still interest payments and it needs repaying. Bonds don't grow on magic money trees either.
Shani> No it's not. Government debt is not the same as business debt or household debt. This is where you are going wrong. very wrong.

It pretty clear that once in office again, labour would just go borrowing and spending crazy again.

In reply to summo:


So you condede that Labour NEVER "[pretended] that government bonds at low interest rates weren't really debt".



Furthermore, I never made that claim government bonds weren't really debt. I am saying that government debt and household/business debt are markedly different.


This is a line that you keep perpetuating. Can you provide ANY evidence that Labour have historically 'borrowed and spent like crazy'?

In reply to Shani:

Nope, you went on a rant about how I thought gov. bonds were household debt extra.


Of course, I don't think anyone has said otherwise. You created an argument against yourself. But, Gov Bonds still have timescales or maturity, they have annual interest, so they could be likened to an interest only mortgage, or business overdraft or bridging loan, where you service the interest monthly / annually, then repay the full amount at an agreed date.


In progressively increasing annual deficit, years before the crash in 07/08.
http://news.bbc.co.uk/2/hi/business/8636701.stm

through the mid/late 90s (pre labour) the annual deficit was falling and went into surplus, then with labour now in office and despite starting their PFIs etc.. labour progressively went into debt, which then exploded in 08/09.
http://www.economicshelp.org/wp-content/uploads/2013/09/net-borrowing-96-12...

EDIT, if you look historically you can see a similar pattern between government borrowing and government in office. They correlate pretty well, so I don't think it's just rhetoric or urban myth that they have some what different spending patterns.

In reply to summo:

The Conservatives have been the biggest borrowers over the last 70 years - http://bit.ly/1piNnRb

In reply to summo:


1) What do you expect the government to do in the face of a financial crash? Do you think the Conservatives wouldn't have borrowed if they'd been in power in 2007/8 during a global financial event?

2) If you were in government what are the conditions in which you would prepared to borrow money?

You seem to have this phobia about borrow, but absolute values are not singularly important - what matters is borrowing to GDP. We all borrow as individuals and businesses. So why not governments? Furthermore I can think of good reasons why you'd want to borrow to invest in infrastructure rather than increasing the tax rate.

In reply to Postmanpat:

Anyone plotted the economy actuals against Osborne's Forecasts?
(Are both lines on the same A3 Page?)

In reply to BnB:


It's self evident that to significantly raise tax receipts then rate rises cannot be too narrowly targeted at individuals, the super rich or whichever mega-evil-corp social media has a bee in its bonnet about this week. Then again is it politically possible to raise rate on the voting middle classes while big corporations and fat Tory donors are perceived to be taking the piss? I don't think so. Both need to be tackled together and fairly but I'm not holding my breath for it any time soon.
jk

In reply to Shani:

Labour was borrowing and throwing PFIs around like confetti before the crash. So they or you can't just blame their borrowing on the crash. They were over spending from 2000 onwards.


you borrow, once you feasible think you might be able repay it in the current generation?


not against borrowing, but the UK has already borrowed and excessively at that. The point is at which stage does a government think it needs to start repaying? Not when to borrow. There has been a huge of amount of borrowing and delayed payment with PFIs, but no thoughts to the future on how we might pay the money back.

But, isn't increasing tax the actual answer? If borrowing has been going up since 2000, pretty much every year barr the last 2 or 3, then surely that says the government is spending beyond it's means? We can pretend we don't have to pay for X and Y now, but then our kids will have to pay for it, perhaps it is better to say if you want free prescriptions that's 1% on the base rate, free Uni another 1%, retire at 65 another 2%, ... services aren't free and need funding.

Look at all the countries that have public services of standard that the UK aspires to, none have lower tax than the UK, you think that is coincidence?

In reply to summo:

Did you mean this as a question? If not, then you are once again wrong. It makes not sense that the burden of paying for an asset should fall on the current generation if that asset is long term. So look at a power station which will have a useful life of 4-5 decades. It makes sense that you borrow over an extended period with the expectation that those generations who will benefit, will contribute to the debt. Doubly so when borrowing is cheap.

If you were to pay for such an asset from tax rises, not only would you hit demand side (VERY foolish in the current economic climate), but you would also burden the current generation with paying for an asset from which future generations benefit.


So given that we currently NEED to invest in power, fibre optics and arguably hospitals, schools, and transport, are you saying we should continue to let these decline as we have "already borrowed and excessively at that"? A simple yes/no will do.


No, not across the board. The current problems are demand side. Tax increases will choke off recovery (a recovery that was significantly helped by falling oil prices).

In reply to neilh:
That's complete nonsense: the 'borrow to build' levels discussed by Labour plans are well within the realms of the possible. You can object because you dont trust Keynesian economics or because you dont trust Labout to behave in the peak part of the cycle but please don't invent spurious arguments. Debt levels have increased but are way off historic highs.

Under Osborne we have printed money through QE and made politically motivated tax cuts (and plan more) so why not spend that money on something more concrete in infrastructure or R&D investment terms. In any case debt has increased under Osborne (on balence sheet, and off balance sheet) and he has consitently missed his own targets (and repeatedly lied about Labour being the cause of the problem which was a global crash, especially when his party were hardly challenging Labour budget and regulatory plans in the run-up to 2008). Private individual debt has increased significantly too under Osborne.

https://www.ons.gov.uk/economy
https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfin...
http://www.ukpublicspending.co.uk/uk_national_debt_chart.html

In reply to Offwidth:


Thats unfair. They said they would match the spending and remove the regulatory burden to be more like Ireland.

In reply to Offwidth:

There is blatantly nothing new in Labours proposal. You and I could easily rattle off a list of the investment projects that need doing in the UK . ( the fact that they have to go through rigorous planning approval processes and take years to get off the ground is a far bigger issue).

As regards the current lot ( who I did not vote for), I see plenty of captial investment going on in the North West.You only have to drive round in either Manchester or Liverpool to see stuff that is going on.Ranging from the new Mersey crossing ( impressive), the new Liverpool hospital ( superb), the M6/M602 link ( about time) and the new rail links in Manchester ( which is full of cranes and " holes"at the moment).

So this rubbish about the govt not investing, does not stack up when you look round.

In reply to neilh:

Given what you said in your FIRST paragraph about the time planning takes (years), can we assume the development you talk of in the SECOND paragraph cannot have been due to the current government (nor the coalition before)?

In reply to Shani:


those in their twenties would benefit from it their whole lives if it was paid off in 30 yrs. We benefit from what our parents paid for and on it goes. To buy something so expensive now, but defer paying for it over many decades costs vastly more in interest etc..


half of those are private industry, not sure why you put fibre there, IMHO it's a little limited, better to move onto 5g etc..


I agree, so tax increases should be slow and steady, at the moment the obsession with lowering income tax, but recouping money from insurance tax seems to be the current plan, rumour. I never suggested you put 10% on all tax bands instantly. But eventually if the trillion plus is to be cleared and service improved, the money needs to come from somewhere. If everyone pays some tax, even the lowest earners, then there is no them and us, everyone contributes to society. Rather than this stigma of givers and takers etc.. or the mentality of the rich elite, the 5% should pay for everything.

In reply to neilh:

More work on a A1 to motorway status in North Yorks/Durham, decades over due.

In reply to summo:


This depends in interest rates and inflation. Save to say Western governments often hold long term debt. We only paid off some WW1 war debts in 2014.


So again, would you see value in borrowing money for ANY large infrastructure project at the moment given we can borrow cheaply?


No one is calling for the 'rich elite to pay for everything'. Once again you are projecting some lefty fantasy. Now given the damage increasing income tax would do in the current economic climate, should we borrow instead? If the borrowing is invested and grows GDP, wouldn't this be advantageous?

In reply to Shani:

How would you judge a sensible level or borrowing - bearing in mind we have a deficit of. 5%(?) still and you are proposing more?

In reply to Shani:

I think you meant WW2 31 Dec 2006? that was with a few missed years due to exchange rate problems. I'd suggest that WW2 was a slightly exceptional event? And we should fund HS2 or power stations the same way?


Not when you can't currently afford to clear your existing debt or even balance the books. One modest recession and the UK, would be f**ked.


No, you said(1548 today) tax increases should not be across the board, who then? It's not the poor, not the rich, the squeezed middle as they are known?

You seem to want to borrow, with no real idea of when and by whom the debt will be repaid, is that really how you want to run the 5th largest economy in the world?

In reply to MG:

It depends on what the money would target and potential returns. There's a range of stuff that needs considering including buying out PFI contracts, green infrastructure (micro hydro schemes offers distributed low carbon energy production, and assists in energy security), innovation (commercial development of graphene).

In reply to summo:


Nope. WW1 (paid in 2015) : http://www.bbc.co.uk/news/business-30306579

In reply to summo:


And yet we've had several recessions since that WW1 debt, and we're still here. What's changed is that inflation is 0.2%, we need to deflate our currency, borrowing rates are the lowest ever and yet we've printed billions via QE.

What's interesting about war is that no one talks about the budget to fight people in sandy countries do they? There's no talk about cutting what we spend in Syria. In fact the government couldn't wait to launch pointless airstrikes in Syria....


Of course not across the board at the moment. The burden of cuts has already punished the most vulnerable in society so no, I wouldn't hit them further. I'd put money in to tackling tax avoidance. A Robin Hood tax on financial transactions bears looking at. Chuck in the canning of wasteful vanity projects like Trident....


Again you're projecting your own lefty fantasy here. I've spoken about borrowing to invest in the UKs infrastructure at a time of lowest ever borrowing rates, and a time when we need to solve a demand side problem and grow GDP. This actually puts me on the same side as the IMF, Joseph Stiglitz (Nobel winning ex-World Bank chief economist), The World Bank, The WTO....and most economists.

But you choose to continually wish to mischaracterise me as some reckless loony leftie who wants to clobber the rich and spend us in to pointless debt. You're wrong again. Maybe this thread has run its course?

In reply to summo:

unthinking, incurious, partisan, debt obsessed fud

In reply to Shani:


This is patently not true, as any defence review (by any party in government) will show.

The quickest of searches on google:

http://www.bbc.com/news/10359548
http://www.theguardian.com/world/2014/apr/23/uk-military-operations-costs
http://www.casi.org.uk/200306%20-%20cost%20of%20war.pdf

In reply to Shani:

That was a bond, bundling together lots of debt in the 30s, some from the war yes. But nothing compared to what followed WW2. All paid with interest costing the UK population every year. Just like any current or future borrowing it has to be paid for in interest.

Government bonds are loaned at same rate as the current banking rate though are they?


I think it's impossible to avoid Syria. Syria won't be fixed by taking refugees though will it?


Robin hood tax, you mean tax certain people more just because you don't like them?


Strange how all the people who advocate borrow borrow borrow spend spend spend aren't the ones actually paid to run countries or CEOs of big multi nationals?

UK debt is likely to reach £2trillion before it start being paid down, how much more do you think it should borrow? How long to repay? How much actually growth would the UK need in real terms to be able to pay it off? The current national debt has been growing significantly for some time, 20 years, how long will it take to reduce it if it goes even bigger. The interest payments even now would build a hospital every month. Roughly a £1 billion per week, think about that number? So we could buy trident for 30 years with less than a year's interest payment. The UK is wasting huge amount of money servicing debt.


Nope, I'm more left than right, I live in a very left country and broadly agree with their policies. They believe in everyone paying their way to some level and living within their means as much as feasible, two pretty good principles to me.

In reply to Donald82:

I presume from this post, you've ran out of arguments or evidence for your thoughts and have moved on to targeting the individual?

-maybe to borrow without a thought to future is unthinking
-perhaps not considering other avenues to fund things other than debt or if we even really need X and Y is incurious
-partisan, can mean both sides of the coin at the same time, a supporter of living within my means, or an anti debt zealot etc.. everyone is partisan in some respect or about something, it is simply related to a given cause they are passionate about, so you are partisan too.

- debt obsessed, I dislike wasting money on interest if I don't see a known long term solution or debt, in 00s when GB claimed the end of boom & bust and started borrowing, he banked on infinite growth to eventually clear the debt, here we are 15 years later. One of the few developed countries in the world with any growth at all and stable currency so something is right, but no where near shifting that debt. Exactly when will the boom come to clear it? I've had serious debt for investment, when we moved here and started the business the bank gave us some big long term loans and a £70k overdraft that was a pretty scary thought initially, but we had a solid plan to moved forward and knew the debt would be temporary. So I fully grasp concept of borrowing for growth. But, exactly how temporary is the UK mega trillions of debt? Big infrastructure projects make somethings easier, but they don't always create growth, taking an hour off the London to Manchester train time won't generate any actual growth, only the economic benefit for paying people to build it, but it won't repay it's cost.(if the UK had a decent 4/5g network people would not need to travel for business so much, but until the UK ditches old school BT it's stuffed.).

In reply to Donald82:


Condescending, arrogant, over-confident, inarticulate, spendthrift, fud.

I am sure this could continue. Not sure it would get very far though.

In reply to MG:

The trouble with economists are they are no different to vicars. They all have different beliefs/faiths.

Keynesian, post keynesian, monetarism, austrian, statism, marxist, etc A good economist might try and model a theory around empirical evidence and statistical analysis...trouble is they are not scientists and the inputs into the economic system are so vast and varied, and susceptible to millions of different factors that to claim an idea is right or wrong is pretty ridiculous.

Most economists who have predicted something correctly fall under the "a broken clock is right twice a day" luck strategy

In reply to KevinD:
Indeed. To be explicit, the tories were not proposing the tightening of bank regs in the run-up to the 2008 crash. You would think from all the accusations now that they would be trumpeting warnings about the banks and government, Maybe they lacked newspaper owners and bank CEOs sympathetic to the conservative cause? For the moment blaming Labour for the post crash increased debt and deficit, looks and smells and reads like a big lie.

In reply to neilh:
It's blatantly new for Labour and even more so for McDonnell (it must smart to speak some of those nasty 'neo-liberal market' words).

I never accussed you of being a tory nor the torys having a complete lack of investment. They speak the language of austerity (actions sometimes rather differ... QE, ideological driven tax cuts, a new expensive internal market in the NHS, starting HS2 from the expensive London end, etc) when I would prefer the perfectly respectable Keynsian economic language of invest more now, and when growth comes tighten the belt then.

In reply to summo:


Doesn't that depend on whether the bond value and rate are inflation linked or not? It certainly isn't automatically true though it could be.


I agree we don't pay enough tax to pay for the services we value. Also I can see the symbolic value in everyone contributing something to the pot but I just don't really see it's sensible to implement. What's the point in taking a nominal, lets say 5% tax from someone earning 10k pa just to give them it and more back in cash so as to keep them fed, housed and healthy (as I believe is the decent thing to do). Yeah you can say that way 'everyone contributes' but I don't care to see the poorest and most vulnerable contribute, I want to see the rich and powerful play by the same rules as everyone else, the ones who have for far too long been given a pass on their voluntary taxation. I want to see them contribute their share. That we don't just give straight back, that has some real and much symbolic value.
jk

In reply to Edradour:



An article from 2010, one from 2014 and one from 2007? Yeah, you got me there. Clearly the cost of war has a high profile when we talk of living within our means.

In reply to Shani:

You're just talking nonsense, utter nonsense.

Do you honestly think that any government doesn't weigh up the financial cost of maintaining and using a military force (including the cost of war) in their wider economic considerations? Of course they do. Has the Trident debate escaped your notice? Or the periodic defence reviews and the huge savings/reduction in force imposed in the last one?

When your argument essentially boils down to 'all politicians are stupid people who can't think about and analyse complex problems' then you lose credibility.

In reply to Offwidth:
I thought ed balls had been saying the same thing for years. How either party dresses it up it does not matter to me. All the party's know the big investments that need doing in the uk. It is not difficult. But to dress it up as new ideology is just not right and people should see through it.

Anyway it's good news that at last it looks like the transit pennine links are going to be kickstarted.

They should have cross party support for these issues.

In reply to Edradour:



But where is the wider media discussion about this? Why aren't politicians talking about it? It is because it attracts negative media spin.


Thankfully that is not my argument - although I do think Osborne is naive to think debt is sinful and he seems blind to how bad his policies have manifested in terms of increasing borrowing without benefiting GDP nor infrastructure.

My argument is that austerity is crushing economic activity and damaging the recovery. Given that we can borrow incredibly cheaply, the UK should embark on green infrastructure investment to stimulate economic activity. This is broadly in line with mainstream economists in all developed economies.

In reply to Shani:


Is that why we've seen such strong recovery in other developed economies, like say the Eurozone?

In reply to pec:


Is a mortgage the same as a loan for a holiday? It depends on what you spend the money on. Green infrastructure investment is a long term asset. I'm suggesting we invest in long term assets.

Where are we going to get the money from to underwrite Franco-Sino nuclear power stations in the UK?

In reply to pec:

Yet the Eurozone is following the same German and IMF led, language of austerity. The UK lead in growth is small and pretty unconvincing, partly as aspects of the UK economy (especially the housing market and linked levels of private debt) look volatile and partly as we, unlike most northern Eurozone countries, haven't been exploiting southern europe (as the Eurozone entry conditions and valuations of currency were wrong and there has been a lack of monitoring and action on Eurozone rule breaches) and now southern Europe is in deep trouble, that easy internal 'export' money tree has withered. Germany in particular knew the score but didn't seem to care, as they unfairly got to suck money out of southern europe since the Eurozone was formed.

In reply to Shani:

My objection to nuclear power has always been primarily about the dishonesty involved in economics (and historically in safety and rationale). I predicted the spiralling costs of the EDF builds to my engineering pro nuclear pals and was almost laughed at. It would have been nice to be wrong, as we need to plug the energy gap somehow, but I will be very suprised now with the news this week if the UK builds go ahead.

My views on HS2 were similar... great idea but don't do something that big unless the costs are under control (which never seems to be possible in the SE unless you are tunnelling under the nimbies). HS2 should always have started from the north where cost overruns were less likely and economically damaging under-investment in infrastructure is way more serious.

In reply to summo:

The 20Y index-linked gilt yields are minus 0.9%. The government is being paid to borrow. Tell me again why we shouldn't borrow....

"The OBR calculates that austerity reduced GDP growth by 1 percentage point in both of the first two years of the coalition government: therefore, the level of GDP was 2 points lower in the second year. As growth did not return until 2013, at the very least that indicates that austerity led to a cumulative output loss of 5 per cent of GDP, which is about £4,000 per household."

http://www.newstatesman.com/politics/economy/2015/04/economic-consequences-...

In reply to Shani:


you managed to find one exception, which justifies your rule? Why isn't the deficit going down on it's own, surely the UK government must be laughing if it is receiving 0.9% of over trillion? Or is it perhaps paying interest on it? As that is perhaps the only bond or gilt that is negative?

To me the point is to borrow when you have expectation of some growth to fund paying it back and at moment it doesn't exist. Not do a Gordon Brown and hope for infinite growth. Strange you don't hear much from him these days, or Darling, or Blair when it comes to the UK deficit, they are very quiet. The voters obviously aired they thoughts on Balls last year.

In reply to summo:



I am not going to defend the previous incumbents as I didn't necessarily agree with their policies and again you are falling in to party politics. I follow economists on economic issues, not Labour.

What we need to do is formulate a policy on today's exceptional conditions where we have a demand side problem, very low inflation, interest rates at their zero lower bound and we can get paid to borrow.

From the link above:

"Although cutting the deficit will reduce demand, this can be offset by the central bank cutting interest rates. Fiscal austerity need not damage the aggregate economy as long as monetary policy is able to push in the other direction.

...

This is all straightforward economics of the kind taught to every economics undergraduate around the world. The government chose a policy that many economists said in advance would do considerable harm. When that harm materialised it had to change its policy. That should have meant the government suffered a large blow to its reputation. The delayed recovery is one reason why living standards have suffered, so this is hardly an academic issue. A government with this woeful record should not be campaigning on economic competence.

...
The austerity mistake involves basic macroeconomics. Cutting spending will reduce demand and is not to be undertaken when interest rates cannot be cut to offset its impact. The Conservatives, if elected, plan further sharp austerity in the early years of the next parliament, at a time when interest rates are still expected to be at or near their floor. Whatever your views about the desirable size of the state in the long run, to cut spending when the economy is still vulnerable in this way is to take a huge risk. It is exactly the risk that materialised from 2010, except today there is not even a hint of market pressure to cut the deficit quickly."

In reply to summo:


No. The UK population think tax should be fair.

"The amount of tax avoided and evaded is hard to estimate, but HMRC admits to an annual tax gap (including tax avoidance, tax evasion and arrears) of around £34 billion. A former World Bank official has estimated it to be around £100 billion a year. And some critics estimate the gap to be around £120 billion a year."

https://theconversation.com/this-election-remember-that-cracking-down-on-ta...

In reply to Offwidth:


You might find this interesting: https://theconversation.com/if-the-hinkley-c-nuclear-deal-looks-astonishing...

In reply to Shani:



So because a few people avoid tax, others should not pay any too?

UK tax take is what £650 billion, are you suggesting that 20% more is evaded, any evidence? Or just internet forum speculation?

In reply to summo:


Eh?

It is not just how MANY avoid tax, but the AMOUNT of tax evaded and avoided.

In reply to summo:

You got that from this: No. The UK population think tax should be fair? Skills!
jk

In reply to jkarran:

there will always be some tax losses, unless you forcibly take every penny somebody earns. The minute you create thresholds and various exemptions, you create avenues for people to avoid paying it. It is simply a battle between HMRC and private sector tax lawyers etc.. as one door closes, they find another and on it goes.

I am not suggesting tax shouldn't be fair, but no system is perfect and the vast majority of businesses pay tax. I don't see a rush of UK residents boycotting Amazon, Google, Facebook etc.. because of their tax avoidance. How long did that starbucks boycott last? So the UK public is just as hypocritical, if it really want them to pay it could kills their business in weeks. Switch yahoo or msn, shop local ie. face to face and learn to talk to people not message them again.

In reply to summo:

You are waffling. Your post above doesn't do anything to address JK's criticism which was about you extrapolating ridiculously from my post.

In reply to MG:

You are Maurice Ronald Geldman and I claim my five pounds

I'd say I expressed my views on Sumo fairly articulately.

In reply to summo:

I referred you to a link to a paper based on careful consideration of, well, evidence. You dismissed it as a theory without evidence without reading it or, from your response, even understanding what the theory was. Which is funny because a lot of what it says would chime with you.

So, 'unthinking, partisan' because you jump to defend your political position without thinking. Debt obsessed because in your unthinking partisan way you can only see debt as a bad thing.

In reply to Donald82:

I love it when Summo goes on a Do...While loop, disliking anyone who disagrees with him.

In reply to Shani:

Yup

In reply to Donald82:


aka "playing the man not the ball," or "the politics of the playground."

In reply to Shani:


Is this your way of admitting you use google, facebook, amazon, etc.. then you come on here and moan about tax evaders?

I generally don't bother with the like/dislike, if I disagree I say so, rather than hide behind the button.

In reply to Big Ger:

The man wasn't playing in the spirit of the game - niggly fouls, time wasting etc. So, I played the ball - cleanly I might add - and took him with it on the follow through. Which is both within the spirit and the rules of the game of football.

Now he's been caught dismissing stuff without half a clue what he's actually dismissing, just because it's not on his side of the debate, he's sheepishly shut the **** up.

In reply to Donald82:

I read the IMF report you linked. Quite interesting. The fiscal space required though appears to be tight for the UK compared to say a country like Norway. So the paper probably has more relevance to those countries with a high "fiscal space" capacity than to those near the edge like the UK. It doesn't really explain where the cut off point is, so not sure if it would be a good idea or not.

In reply to Bjartur i Sumarhus:

The UK has plenty of what this paper refers to as fiscal space. Well done for reading though.

In reply to Bjartur i Sumarhus:


Good explanation here..... https://flipchartfairytales.wordpress.com/2015/06/05/how-big-a-problem-is-t...

In reply to Donald82:

"The UK has plenty of what this paper refers to as fiscal space"

Ok, so lets try and quantify it. According to this http://www.economist.com/blogs/freeexchange/2015/06/public-

"This concept refers to the distance between a government’s debt-to-GDP ratio and an “upper limit”, calculated by Moody’s, a ratings agency, beyond which action would have to be taken to avoid default."

Apart from a nice graph, it's hard to quantify exactly what the UKs "fiscal space" is. They say that the tipping point would be just below the "cautionary" zone (which Britain is just above) . How does Moody's calculate an "upper limit"?

The IMF paper mentions that paying off debt for countries in the red or yellow zone would offer a very high reward with diminishing returns as countries fiscal space widens. So the question for me is where is the tipping point? I agree that the UK is probably a long way from a sovereign debt crisis or currency crisis. But is there a balance where some paying down of debt (maybe less than GO is trying to do)is optimum rather than leaving it and waiting for growth?

In reply to Bjartur i Sumarhus:
I think the IMF and the rating agencies are very important as they affect state lending but never forget they all missed the crash, so basically in big picture terms they simply don't know what they are talking about. Keynesian economics believes in balanced budgets but is clear when you should invest in the cycle and its almost the opposite view to the headlines from George and those organisations (albeit in practice much sneaky Keynesian-like investment has occurred, especially in the US and even some in the UK).

In reply to Offwidth:

Indeed!

I think yields, inflation and exchange rates price this in from a market perspective.

In reply to Bjartur i Sumarhus:


IMF papers say no - for UK conditions, cost outweighs benefit. It says Labour's fiscal rule is sensible, Tories' isn't.

Of course you could argue it's wrong. Expect no one on here has the understanding to do so themselves, but there may be informed critiques out there.

In reply to Offwidth:


This is a silly thing to say. Economics is bad at predicting recessions - if it was good at it they wouldn't happen - but it doesn't mean it's bad at everything. Standard macro has been fairly good at predicting the results of austerity, for example.

In reply to Donald82:

Yeah right. No one's knows what's going on. Which is why we lurch from one crisis to another at pretty much all levels - banking, Euro, China, UK finances etc. . In only a few months OBR forecasts have gone from positive to dire, for example. The idea there is some group of "informed" experts is clearly nonsense, no matter how higly paid and self-confident some economists are. The best we can do us acknowledge we can't predict financial developments and plan accordingly.

In reply to MG:


Yes. Agreed. IMF paper acknowledges this and says this we shouldn't pay down debt.

Regarding over confident economists. No good economist is claiming to be able to predict recessions. In fact, they're all pushing the point that you can't and making policy recommendations based on this.

On the other hand, arrogant tw*ts that think their 'common sense' can do better when they don't even understand what the economists are arguing.. away and have a w@nk over your ISA with Summo

In reply to Donald82:


I cant see anything like that in their most recent report on the UK economy, the opposite if anything. From the IMF report in Feb:
http://www.imf.org/external/np/sec/pr/2016/pr1671.htm

"Directors commended the authorities’ substantial fiscal consolidation efforts thus far and supported their plans to sustain measures to achieve stronger public finances and further rebuild buffers. They highlighted the importance of further strengthening the pro-growth and pro-stability aspects of the consolidation, including by scaling back distortionary tax expenditures,"

In reply to Donald82:

"Of course you could argue it's wrong. Expect no one on here has the understanding to do so themselves, but there may be informed critiques out there."

Bill Mitchell isn't convinced http://bilbo.economicoutlook.net/blog/?p=31093

"First, they do not differentiate between currency-issuers (as above) and the Eurozone nations (currency-users).

Second, they use technical dodges (ad hoc autoregressive corrections) to mop up estimation problems. These usually indicate a mis-specified econometric relationship and means that the model is incorrect.

Third, they admit that “the coefficients on the debt ratio, however, are common across countries; this is necessary because (as hypothesized) the response of the primary balance varies by the debt level, but the full range of debt is not observed for any individual country.”That point is in a small print footnote to the results Table 1. What does it mean. It means they have not been able to freely estimate the most important unknowns in their model (the relationship between the primary balance and debt) and so they have just imposed the relationship on all nations.
In econometrics, this is called imposing a restriction on the model to simplify the estimation process. The problem is that such impositions should be stochastically ‘tested’ using significance tests. One examines the difference between the restricted model and the unrestricted model and uses special tests to determine whether these differences are statistically significant or not. If not, the imposition of the restriction is acceptable and simplifies the estimation process.They did not do that. So the coefficients on the debt variables are essentially ‘made up’ and cannot be applied with confidence to all the nations (especially those with no relevant data).

Fourth, conceptually, the model ignores basic realities. The central bank of a sovereign nation can set whatever yield on public debt that it considers desirable. These nations might pretend they at the behest of the private bond markets but when push comes to shove, the central bank always dominates.So the idea that a government has to stop net spending or needs harsh austerity if the private bond markets start pushing up yields to ridiculous levels is ridiculous.Even the ECB in the Eurozone has demonstrated it can control yields whenever it wants by buying up government bonds in secondary markets.

Fifth, a sovereign, currency-issuing nation does not even have to issue debt to maintain deficit spending levels at whatever level they desire. It can instruct the central bank to credit bank accounts at will. Given the propensity of such governments to impose voluntary restrictions on themselves, such a move might require a legislative change.But the fact is that when the crisis hit these governments had no trouble getting cash.

Sixth, the case of Japan. The IMF/Moody’s modelling would have declared Japan to have zero fiscal space nearly two decades ago. This has been a repeated claim.Since that time, Japan has continued to run large deficits and issue bonds and very low yields. It reached the IMF debt limit from their models years ago.

In reply to Bjartur i Sumarhus:
More serious was the behaviour of the rating agengies in the crash (a nice layman's view is in the film "The Big Short"... this isnt made up ... .they were questioned before the crash and didn't want to turn off the money tap from the banks who were asking them to rate packaged junk disguised as diamonds). This is why Donald is wrong... its not that they couldn't spot the crash, the fact is that they knew and deliberately didn't stop the bad practice and then made money on the decline partly casued by them as well. They were an intrinsic part of a corrupt system . I guess we will have to wait and see what happens to all the lawsuits (in the billions) but it certainly looks like they have got away with it, like Goldmans (who also knew and over hedged against their own bonds whilst still selling them, to the last).

https://en.m.wikipedia.org/wiki/Credit_rating_agencies_and_the_subprime_cri... and the reference links from those pages.

"The FCIC commission found that agencies' credit ratings were influenced by "flawed computer models, the pressure from financial firms that paid for the ratings, the relentless drive for market share, the lack of resources to do the job despite record profits, and the absence of meaningful public oversight. McLean and Nocera blame credit ratings lapses on "an erosion of standards, a willful suspension of skepticism, a hunger for big fees and market share, and an inability to stand up to" the investment banks issuing the securities."

In reply to Offwidth:

Typical 'banker bashing'. Thank god 'banker bashing' is coming to an end!

"A review of Britain’s banking culture has been ditched by the UK’s financial watchdog only months after its launch, in the latest sign that the years of “banker bashing” are coming to an end.

The Financial Conduct Authority has abandoned its assessment of culture at retail and wholesale banks operating in the UK, saying each company is unique and cannot be easily compared, according to people familiar with the situation.

The move to scrap the review comes after Martin Wheatley, the watchdog’s chief executive, was defenestrated by the Treasury in the summer and reflects a more positive tone towards the City of London following the Conservative party’s election victory."

In reply to Shani:

Spot on satire...

The public of course paid for all these wrongs (Lehman's and an odd few others aside) and soon they might be able to pay again. As a delightful twist the anti-regulation neo-liberals in the UK even got to watch the blame mostly fall on Labour (due to their dirty hands and refusal to tell the clear truth of 'the big lie'). It's painful if ordinary folk got burnt in the UK with all the welfare cuts but nothing like as much as being burnt in the US.

In reply to Offwidth:


This is the biggest threat to the country; not the debt nor deficit per se, but the risk of repeating those mistakes by our failure to address the underlying cause of the last crash.

Credibility with financial markets doesn't come with austerity, it comes from creating robust institutions, because the money will flow to safe investments at the first sniff of trouble.

We are building in fragility to the economy by allowing 'to big to fail' institutions to behave like this. The next banking crisis WILL occur and sooner than we think.

In reply to MG:


Surely the point is that the experts can help us deal with the problems than a random world ("events, dear boy, events") throw at us?

In reply to summo:


You do realise that the government issuing debt and then rolling it over has been doing on since before the Labour Party was even invented?

I assume that you realise only about a quarter of government debt is index-linked...?



The thing with this spending is that it's a visible cost. But if you don't invest money in infrastructure, training, research, hospitals, etc, then you also lose money. Your economy grows that little bit more slowly, problems avoided now come back but in their older, bigger, more expensive forms, investments still need to be made but now it's all a bit more expensive. It's harder to quantify and it isn't a headline grabbing, easy-to-understand figure, but paying down debt has a cost too.

In reply to Bjartur i Sumarhus:



Erm, isn't this link arguing against austerity? Or have I read it wrong?
"...the idea that a government has to stop net spending or needs harsh austerity if the private bond markets start pushing up yields to ridiculous levels is ridiculous."

Or maybe I've misunderstood it.

In reply to seankenny:
I think your only misunderstanding is what his main premise in this blog post is...not that austerity is good, rather that this IMF hypothesis is bad.

His argument is that the IMF study is not worth reading due to the fact that their economic modelling to create a "fiscal space" measurement is flawed (as is Moody's who just copied the IMFs formular)...for example using the point that according to the IMF paper, Japan has no fiscal space, yet has managed to borrow cheaply for decades and had no sovereign crisis as such.

He has another post on an aspect of UK austerity and failure here...http://bilbo.economicoutlook.net/blog/?p=32847
and here http://bilbo.economicoutlook.net/blog/?p=32720

I would say he is more anti than pro austerity but happy to be corrected, not read much of his stuff

In reply to seankenny:


In many fields that's true. Bridges, for example, tend not to collapse if designed and built by engineers but would do if Joe Bloggs designed them. Economists however, despite what they say, have very, very little ability to make accurate predictions. Those they do make are normally very badly wrong. Certainly the errors in their predictions are vastly higher than they acknowledge. As one example, there have been many forecasts over the last five years that interest rates will soon rise. This hasn't happened and in fact they are now being cut. Similarly forecast growth rates, oil price predictions and in fact pretty much anything you choose to mention, economists have got wrong. Add to this that whatever the question, there will be economists predicting pretty much every outcome conceivable, and the whole thing becomes rather laughable. Anything but the broadest of broad brush claims by economists are just wishful thinking. The idea that Osborne's plans are obviously bad (or good) based on economists predictions is absurd.

In reply to MG:


Here's an economist taking that point on for you (I lack the knowledge to be able to trash or to defend an entire academic discipline so confidently...)

http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2016/03/in-d...

In reply to seankenny:

Yes and when labour took office after the 90s, it inherited an annual SURPLUS, that soon changed, when Gordon ended boom & bust, turning it into a DEFICIT, all bust and no boom, so I guess he was technically correct.


Yes, inflation is currently lower than rates we are paying on most long term bonds as many are fixed, the government isn't winning by currently spending £1 BILLION PER WEEK in interest, even if they are linked etc..


If people can go out and spend £700 on a phone, get smashed a few nights of the week, spend £20-30k on a car, £2k on a holiday or more a year.. I'd say many in the population could spare a little.

I agree, you need to invest, but when debt is already high etc.. perhaps taxes are too low for the services people desire.

In reply to seankenny:


Stumblingandmumbling.typepad.com/stumbling_and_mumbling/2016/03/in-defence-of-some-economics....

And here he derides the ability of economists to predict!

m.investorschronicle.co.uk/2013/09/03/comment/chris-dillow/why-we-can-t-predict-CBw6Z40EZFbzw09qOKBRyK/article.html

In reply to Shani:

No contradiction tho, surely?

In reply to summo:

Erm, didn't we go into a surplus during th Labour govt and not before? Perhaps I read the figures wrongly...


Not entirely sure why my comments on the unseen consequences of austerity led to this little rant about permatanned blokes in Beemers, but there you go. Nowt so queer as folk.

Incidentally you do know what the UK's median income is right?


Well, maybe. As a supporter of austerity can you explain why the deficit absolutely has to be dealt with by 2020?

In reply to seankenny:


perhaps for a year, but they were over spending for the off, it might have taken one financial year to show in the books though.


Yes and increasing the 40% tax threshold won't have done anything for them and only lowered revenue in which to improve services.


that's the problem with 5 year election terms and the public being very short sighted (as a rule), all goals are based around elections, it is good to have a target though even if you don't beat it. Could be worse it could be US system. 1 year in office to find your feet, 2 years fighting towards mid terms, then a year of candidate selection and the next election. Nothing ever gets done.

I expect many would like to see the goal of reducing the annual deficit by 0.01% by 2030 and then declare their efforts a huge success, thoroughly on target, when they reduce it by 0.002% every year. Better to aim high, no one ever achieved great success by hoping for a mediocre performance. Although I do think Osbourne is very mediocre.

In reply to seankenny:


Well said! Some interesting analysis featuring a negative multiplier here (austerity):

www.primeeconomics.org/aticles/2jvpzx46pbdetre3rss4l2g24jxyaa

In reply to summo:



Thing is, actually it was three years. And the fourth was a very, very tiny deficit. What is interesting is that this stuff is publicly available and thanks to the internet takes about two minutes to look up. Why when we can know more about reality more easily than ever before do we choose to ignore it? Answers on a postcard...

And what is interesting is that by the late 90s Britain's inner cities were in a dire state. Schools were falling to bits, hospitals were overcrowded, there was lots of stuff which needed doing. Have we forgotten all this?



Agree with that sir.


Surely this is the point at which a paen to the Chinese comes along...?


I think many would like to see success defined as more than simply the deficit.

In reply to seankenny:

you actually think any improvement can be attributed to any party? Most was a creeping improvement in general standards across the West. There are plenty places which were just as grim after 15years of labour, it wouldn't be labour interest to have their heartland populations in full employment pushing towards that 40% tax threshold, they'd lose all their core voters. Keep the poor poor and tied to the government, for either state employment or benefits.


Quality of life and standard of living. So; working conditions, high minimum wage, working hours, functioning national infrastructure, good health and education, adequate pension etc.. they all need funding. But having one great decade and hailing it a success isn't so good if it takes the next generation 3 decades to pay for it. You can't keep funding the good times, if you are paying a fortune in debt off.

In reply to seankenny:


those were the years when GB sold off 58% of the UK's gold reserves. Which he sold cheap because he told the markets in advance and price then dived. He did it to invest in Euros to diversify and protect UK assets. Gold within 6 years was double the value and the Euro many percent lower. All hail GB's fiscal wisdom.

In reply to summo:



A very quick check of the actual facts shows that the UK surplus reached up to £50bn in one year, whilst the gold sell-off netted $3.5bn (note that I've not used inflation adjusted figures, can't be arsed). So your insinuation that the only reason Labour ever ran a surplus was due to an ill-timed asset sale isn't bourne out by the numbers. But then, as you say, the money was re-invested in euros, dollars and yen, which of course actually generate some income and it's fairly prudent to have your reserves tied to the prices of three different assets rather than one.

Unlike you, I'm no expert on the skills required to play the commodoties markets, but I do suspect it's the kind of thing the economist and mathematician Nicholas Naseem Taleb would describe as a "luck-based profession".

In reply to summo:


So the government is really powerless and can't control much, barely even build a school.


So the government is really powerful and can control the wages of millions of people, and does its best to keep them down.

Shurely shome mishtake in your reashoning Mish Moneypenny?



But didn't child poverty go down under Labour? Didn't tax credits help people into work, such as single mothers, who wouldn't otherwise have been in work?



So if we build a school or a hospital, which will easily last for three decades, the people who are still benefitting from it years later shouldn't have to pay for it? Or if the cost of not having those things is a smaller economy in the future, then surely those future generations will be paying a price too?

Bear in mind that the reason we have a lot of government debt is due to a financial crisis and a worldwide massive recession. You know, that thing back in 2007.

In reply to seankenny:


I thought most went into Euros, which has never made anything, especially not compared to gold which would have doubled in value in less than decade.


very little is luck imho, what people say was bad luck is often actually greed, where people hang into losing ventures for too long, ignore the warning signs, are eternally optimistic in the face of the evidence. You can learn quite a lot about your own personal character trading. I've trade for nearly 20 years now, but never currencies.

In reply to seankenny:


Standard labour policy, place all the big state sector employment in their core constituencies, keeps the voters tied. Look at most labour heartlands and you'll find a big state employer. DVLA, Benefits, Pensions etc..


Or subsidise employers depending on your angle? Didn't child poverty in the west go down pretty much anywhere though, so you hardly give labour all the credit there?

In reply to summo:

Per year in office since 1979, Labour have grown the economy more in real terms than Conservatives - although it is close.

http://www.taxresearch.org.uk/Blog/2016/03/20/who-grew-the-economy-most-its...

In reply to Shani:

At least you picked a completely biased far left source for your link. I bet the guy has never written a word in his blog or in the books he sells that agrees with the conservatives.

But what is the point in growing the economy, if you still owe lots of money afterwards, the economy grew in the 00s, nobody denies that, but where was the benefit in the long run. Even in the good years, assets were sold, PFI here there and everywhere, there was no plan for the future, it was a like a teenager on payday, with no idea about the other 6 days of the week.

In reply to summo:


40% euros, 40% dollars, 20% yen. It's almost like... you are convinced you know stuff without checking it out first. I mean, why, given that this knowledge is more available than ever before.


So betting on the financial markets is all about skill?

In reply to summo:


Play the ball, not the man!


Osborne is selling off everything he can. It's appalling, incompetent, short-sighted and immoral.

His policies have damaged the economy forcing it to crash harder and deeper. Osborne has failed to hit his targets and is backing away from the most egregious policies.

Productivity is falling. Jobs are abundant but short term, insecure and poorly paid.

In reply to summo:


Well these tasks need doing, why not do them in areas that have little alternative employment and are cheaper than London and the SE? I'm sure if the Labour govt had put all those things in the SE then you'd be having a go because it's more expensive.

Even so, you still seem to ignore my main point, which was that you haven't decided what you really believe about government, prefering to flip when it suits you.


Well child poverty went up a lot in the 1980s and it's going up again now, so again is that due to political decisions made, or just the UK floating along on general trends that politicans have nothing to do with? In which case, why bash the Labour govt so much? If they did something good, it was going to happen anyway, if they did something bad, that was a dumb decision. I mean, that's not partisan, it's just a faulty view of how the world works.

In reply to seankenny:



you mean spread betting, CFDs etc.. high exposure off limited cash assets. Or just betting online that the ftse will finish up or down?

Whilst the bet might be simple, the research behind it can still be in depth. What will the pound or euro do in June? The pound could swing 10% either way, it's impossible to know now, but nearer the time, more predictable. There were a few people who made money simply betting on the Scottish Referendum, they looked at all the poll results etc. and took a punt, an extremely calculated low risk punt. Most banks employ people with some fairly high end maths or science quals, I think if they were simply playing spin the bottle and picking currencies, they'd hire anyone for much less money? Whilst it's pretty old hat and very outdated compared to the modern algorithms run these days, google black scholes a relatively simple equation people were using decades ago to predict markets for trading purposes.

In reply to MG:

Fair enough. Either IMF exec committee disagrees with IMF policy nerd's analysis. Or they're being a bit political. I expect the latter because I'd expect they're careful about what papers they publish. Maybe they're happy with the move towards surplus just now, and might be more critical if we got their and it was having a negative effect on growth? Although everyone's a keynesian when they're in a tight spot, so we'd probably never get there.

In reply to Bjartur i Sumarhus:

Good find and interesting post. As I said, reasonable critiques may be out there, and this seems like a reasonable critique to me. I would say that though because his general point is that the paper overstates the risk of debt particularly or at least for countries that issue their own currency.... like the UK.

That said, I don't understand the econometrics points. They could point in the other direction, the same direction or in no direction at all.