/ The National Credit Card

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Jon Stewart - on 23 Nov 2016

Apparently it's alright to max it out again, for infrastructure spending. A little while back, that would have led to armageddon, yet now the metaphor of household spending has suddenly lost its relevance and talk of "living within our means" has fallen silent. National debt to GDP at 90% is OK, these days.

What are we to make of this? Brexit is predicted to suppress growth (thanks, guys), and the response is to borrow more. Was this part of the plan? What is the plan? Does anyone have any strategy, any idea of what to do next, any principles to follow?

We've got a prime minister who believes that brexit means brexit, but doesn't believe in brexit, and doesn't actually know what it is. We've got a chancellor who has over-written 6 years of austerity without any explanation of why the previous 6 years were wrong. Boris Johnson is Foreign Secretary. This is a f*cking farce.
Post edited at 20:07
KevinD - on 23 Nov 2016
In reply to Jon Stewart:

if the tories do it its cunning financial planning and not the magic money tree at all.
Remember you can trust them with the economy.
wintertree - on 23 Nov 2016
In reply to Jon Stewart:

I don't have an intrinsic problem with heavy government borrowing, especially when bond rates are so low that it pays to borrow in the short term.

I do have a problem with borrowing for ever with no apparent end in site or plan to pay it down. As long as GDP growth outstrips borrowing growth its sustainable, but if for some unforeseen reason the economy shits a real brick, that all changes.

I also have a bit of a problem with borrowing set against farcical scale financial waste, the new aircraft carriers and insanely expensive F-35s that we won't be allowed to service ourselves are currently top of my list of ire. Somehow we're borrowing lots, systematically gutting the navy and making BAE Systems and Lockheed Martin rich. Not worth selling our financial security down the river for that.
Post edited at 20:39
Dave Garnett - on 23 Nov 2016
In reply to Jon Stewart:

> We've got a prime minister who believes that brexit means brexit, but doesn't believe in brexit, and doesn't actually know what it is. We've got a chancellor who has over-written 6 years of austerity without any explanation of why the previous 6 years were wrong. Boris Johnson is Foreign Secretary. This is a f*cking farce.

And then there's Dominic Raab. He seems to be Alan B'stard reborn. The same smugness and ambition he doesn't trouble to conceal, he even looks like him.

It's odd. There's a lot in his CV that's quite admirable, and I even agree with some his policies, but there's just something about him that raises my hackles almost immediately, and it's not just the Europhobia. And, for a lawyer, his immediate denouncement of the highly inconvenient HC decision on triggering Art 50 without a parliamentary vote was extraordinary.
Jon Stewart - on 23 Nov 2016
In reply to wintertree:

> I don't have an intrinsic problem with heavy government borrowing, especially when bond rates are so low that it pays to borrow in the short term.

Nor do I. However, I have a *massive* problem with being told for 6 years that it's of paramount importance that we cut spending by taking away benefits for disabled people, otherwise we'd have to borrow more and the world would end, to then be told that it didn't matter, it was all a joke.

If that isn't a massive problem for the Tory party, then pardon me for asking, but what the f*ck is?
wintertree - on 23 Nov 2016
In reply to Jon Stewart:

> If that isn't a massive problem for the Tory party, then pardon me for asking, but what the f*ck is?

Perhaps I'm ultra naive but I see it as a good thing if people can do an about face sometimes. Shame nobody has the guts to explain why in simple and clear language, with reference to past decisions.

Also, things are very different to 6 years ago. Brexit and all that. It's a significant shift in the modelling I expect.
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Dave the Rave on 23 Nov 2016
In reply to wintertree:

> Perhaps I'm ultra naive but I see it as a good thing if people can do an about face sometimes. Shame nobody has the guts to explain why in simple and clear language, with reference to past decisions.

> Also, things are very different to 6 years ago. Brexit and all that. It's a significant shift in the modelling I expect.
Yes. Things are different. The pig fecker has gone. Teresa will save us all.
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MG - on 23 Nov 2016
In reply to Jon Stewart:
You're obviously right. As a result of this and myriad other things, Corbyn has possibly the easiest job of any opposition leader ever right now and is really taking it to the government. Oh, no, my mistake, sorry.
Post edited at 20:55
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Jon Stewart - on 23 Nov 2016
In reply to wintertree:

> Perhaps I'm ultra naive but I see it as a good thing if people can do an about face sometimes. Shame nobody has the guts to explain why in simple and clear language, with reference to past decisions.

I agree, if they accept that they were wrong and preferably give an explanation of what information has come to light to change their mind. When the policy was to take away the money that people needed to live because borrowing was a worse option, how can borrowing now not be a bad thing? What has changed?

> Also, things are very different to 6 years ago. Brexit and all that. It's a significant shift in the modelling I expect.

Err, yes, they're WORSE!! How in the name of holy f*ck can this justify a greater tolerance of borrowing? We live in a demented version of democracy where what you vote for means nothing. Why don't we just give up and have a lottery system of government, which I genuinely think would be more successful.
Jon Stewart - on 23 Nov 2016
In reply to MG:

> Corbyn has possibly the easiest job of any opposition leader ever right now and is really taking it to the government. Oh, no, my mistake, sorry.

Oh god I know. This is what happens when there is no opposition. Government and democracy unravels.
Neil Williams - on 23 Nov 2016
In reply to Jon Stewart:
My personal take on borrowing is that it's OK to borrow for capital items with a long-term value (house, car etc) but not for operational or luxury items (day to day living, holidays etc).

I'm quite happy for the Government to do the same. So by all means borrow to finance HS2, railway rolling stock, roads etc, provided there is a plan to settle the loans from income from the assets. But no borrowing for day to day operations - if tax is too low to cover those costs it needs to go up.
Post edited at 21:00
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MG - on 23 Nov 2016
In reply to Jon Stewart:

> We live in a demented version of democracy where what you vote for means nothing.

Err this is exactly what people voted for. There was a referendum, and all.

1
Neil Williams - on 23 Nov 2016
In reply to wintertree:

> Perhaps I'm ultra naive but I see it as a good thing if people can do an about face sometimes. Shame nobody has the guts to explain why in simple and clear language, with reference to past decisions.

I agree. I change my mind in the face of changing evidence or situations. Why is a Government always decried for doing so?
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Mick Ward - on 23 Nov 2016
In reply to Jon Stewart:

> We've got a prime minister who believes that brexit means brexit, but doesn't believe in brexit, and doesn't actually know what it is. We've got a chancellor who has over-written 6 years of austerity without any explanation of why the previous 6 years were wrong. Boris Johnson is Foreign Secretary. This is a f*cking farce.

Admirably put.

Alice in Wonderland. Malice in blunderland?

I used to worry that my old age would be boring. Thankfully my fears have proved groundless.

Mick

Jon Stewart - on 23 Nov 2016
In reply to MG:

> Err this is exactly what people voted for. There was a referendum, and all.

I don't recall a referendum on reversing fiscal policy? If I'd known that's what it was about, maybe I'd have voted out!*


*Not really, it's not a good idea when combined with self-inflicted economic decline.
wintertree - on 23 Nov 2016
In reply to Jon Stewart:

> Err, yes, they're WORSE!! How in the name of holy f*ck can this justify a greater tolerance of borrowing?

Some thoughts:

1) Because economics is not linear. If it was, it wouldn't be a never ending series of grief. It's non linear and chaotic, more A doesn't always imply more B.

2) Perhaps because if we leave the EU we have precisely one shot to get it right and keep business here. That sort of punctuate time limited thing is much better suited to borrowing than an eternal propping up of the coffers. Although it's a gamble - borrow and it doesn't work and we're even worse of.

3) People can change their minds, even if they're reticent to admit it. I fear a government that won't change its mind in the face of evidence far more than our current less-than-ideal democracy.
Post edited at 21:16
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MG - on 23 Nov 2016
In reply to Jon Stewart:

Well people voted for a massive hit to the economy, with predictable (and predicted) results. But at least we are free now.
2
Jon Stewart - on 23 Nov 2016
In reply to Neil Williams:

> I agree. I change my mind in the face of changing evidence or situations. Why is a Government always decried for doing so?

In this case, the govt is being derided because *by their own principles* the new situation makes borrowing a *worse* idea. There is no justification for the u-turn.

This u-turn reveals the whole agenda of 6 years of cuts to be bogus. If increasing borrowing now is OK, how can the cuts to disabled people's benefits be justified. This isn't a little policy u-turn where what sounded like a good idea turned out to be unpopular for reasons that weren't anticipated. This is a rubbishing of 6 years of economic strategy, a whole ideology with drastic human consequences binned as if it just doesn't matter. No explanation. No apology. Just "oh, actually, it doesn't matter".

To paint that as a humble adjustment of policy in the face of new information is f*cking ridiculous, and you know it.
1
Jon Stewart - on 23 Nov 2016
In reply to wintertree:

> Some thoughts:

> 1) Because economics is not linear. If it was, it wouldn't be a never ending series of grief. It's non linear and chaotic, more A doesn't always imply more B.

If it's that chaotic, then we shouldn't bother with any policy at all, let's just roll the dice. I'm not actually being *that* facetious - I think you can't predict the effects of tax and spend decisions, and there's never a counterfactual so you can't evaluate decisions. So I'm all for spending on what we need most and seeing what happens, a bit like our Chancellor.

> 2) Perhaps because if we leave the EU we have precisely one shot to get it right and keep business here. That sort of punctuate time limited thing is much better suited to borrowing than an eternal propping up of the coffers. Although it's a gamble - borrow and it doesn't work and we're even worse of.

I quite like the argument, but I don't believe that's what's going on. I don't think the modest spending increase is going to be the make or break of brexit. I think May's govt just never believed in the Osborne strategy, which was a massive crock of shit, obviously. Tory voters the length and breadth of the country swallowed his vile agenda of attacking the vulnerable simply because they don't like the idea of spending money on those people. But they're so tribal that when the story changes, they don't question that either. What's the point in having policies at all if all that matters is the colour of your posters?

> 3) People can change their minds, even if they're reticent to admit it. I fear a government that won't change its mind in the face of evidence far more than our current less-than-ideal democracy.

See my previous post about policy u-turns.
krikoman - on 23 Nov 2016
In reply to Jon Stewart:
Meanwhile NHSP is being sold off, a profit making, NHS saving operation (sorry) that puts money back into our NHS going to be privatised.

There's a word for these bastards and it's not bastards it's C**ts
Post edited at 22:21
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Jimbo C - on 23 Nov 2016
In reply to Jon Stewart:

> Apparently it's alright to max it out again, for infrastructure spending. A little while back, that would have led to armageddon, yet now the metaphor of household spending has suddenly lost its relevance and talk of "living within our means" has fallen silent. National debt to GDP at 90% is OK, these days.

Austerity is a pig, but at least George Osborne had a plan and if the end result was being able to start paying back our massive and crippling national debt then it would have been worth sticking it out. Now it feels like all that time has just been wasted.

> What are we to make of this? Brexit is predicted to suppress growth (thanks, guys), and the response is to borrow more. Was this part of the plan? What is the plan? Does anyone have any strategy, any idea of what to do next, any principles to follow?

My impression of this governemnt is that there is no overall strategy, no competance and weak leadership.

> We've got a prime minister who believes that brexit means brexit, but doesn't believe in brexit, and doesn't actually know what it is. We've got a chancellor who has over-written 6 years of austerity without any explanation of why the previous 6 years were wrong. Boris Johnson is Foreign Secretary. This is a f*cking farce.

Yes it is.
Shani - on 23 Nov 2016
In reply to Jon Stewart:
I simply CANNOT WAIT for BnB, Summo and Big Ger to turn up on this thread.
Post edited at 23:20
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Alasdair Fulton - on 23 Nov 2016
In reply to Jon Stewart:
I think you're missing something fundamental - it's ok to borrow when the upper echelons of society will benefit. It's NOT ok to borrow if it's only the disabled, vulnerable, poor underclass who benefit.
Dave Garnett - on 23 Nov 2016
In reply to Mick Ward:

> I used to worry that my old age would be boring. Thankfully my fears have proved groundless.

Your pathological optimism is an inspiration to us all!

Chris the Tall - on 23 Nov 2016
In reply to Jon Stewart:

Last week the govt lost a high court case over it's failure to act over air pollution - it was told it's timetable to come up with a plan for something which is killing many thousands each year was too lax and it must do something within 8 months.

And here we are. Never mind 8 months, just 8 days later it's a massive road building program and cheaper petrol. Yep, that'll do the trick.

so farewell to Austerity, and good riddance. Of course the people who were worst affected by it were often those who voted for Brexit, so maybe democracy does work after all. Except that it's the youngsters who voted to remain who will end up paying.
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RomTheBear on 24 Nov 2016
In reply to Chris the Tall:

> And here we are. Never mind 8 months, just 8 days later it's a massive road building program and cheaper petrol. Yep, that'll do the trick.

Actually you'll find that the road building program is very modest, and not massive at all, and there is no cheaper petrol, the fuel duty just stay frozen has it has been for a while, instead the price of car insurance will go up because of higher tax.

Hugh J - on 24 Nov 2016
In reply to krikoman:
> There's a word for these bastards and it's not bastards it's C**ts

What was it that Sandi Toksvig said about Tories and cuts again?
Post edited at 06:32
Hugh J - on 24 Nov 2016
In reply to Shani:
> I simply CANNOT WAIT for BnB, Summo and Big Ger to turn up on this thread.

Hmmm . . . conspicuous and absence come to mind.
Post edited at 06:34
Big Ger - on 24 Nov 2016
In reply to Hugh J:
Or just enjoying not giving Shani what s/he wants?


Ps. Saffers are 5/117 here.
Post edited at 06:51
DerwentDiluted - on 24 Nov 2016
In reply to Jon Stewart:
Surely this is all project fear doom mongering? Don't you know the secret plan? £122Bn in increased trade post Brexit, the dairy farmers and beekeepers of the UK will single handedly put the UK in the black with exports of milk and honey.
Post edited at 07:51
summo on 24 Nov 2016
In reply to Shani:

> I simply CANNOT WAIT for BnB, Summo and Big Ger to turn up on this thread.

just because a government has decided to spend more doesn't mean it is the right thing to increase national debt by even more, it just means they've changed their policy. Debate is pointless here, as it just turns into name calling unless you agree with anti austerity left leaning UKC majority, so I shall not be bothering. My only hope is that if my kids ever go to work in the UK (at least a decade away), they won't be repaying the debt which my generation and my parents accrued, simply because people now aren't currently willing to pay back what has already been spent.
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Stuart (aka brt) - on 24 Nov 2016
John_Hat - on 24 Nov 2016
In reply to Jon Stewart:

> Nor do I. However, I have a *massive* problem with being told for 6 years that it's of paramount importance that we cut spending by taking away benefits for disabled people, otherwise we'd have to borrow more and the world would end, to then be told that it didn't matter, it was all a joke.

> If that isn't a massive problem for the Tory party, then pardon me for asking, but what the f*ck is?

I absolutely agree with every word above, apart from the last line. It *isn't* a problem for the tory party. It's a problem for all the poor souls whose lives have been ruined as a result of a politically inspired lie. I doubt many voted tory. Hence it's not really a problem for the tory party. Which is why they don't care about these people.
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John_Hat - on 24 Nov 2016
In reply to Mick Ward:

> Malice in blunderland

A very good phrase that I may re-use!
BnB - on 24 Nov 2016
In reply to Shani:
> I simply CANNOT WAIT for BnB, Summo and Big Ger to turn up on this thread.

Neither Summo nor Big Ger are natural bedfellows of mine although their posts can be entertaining. Putting aside the hint of the playground in your post, I don't come from the same standpoint either politically or discursively. I just like to provide a well-informed counterpoint to the arguments raised here. Throw me in with neilh or Pat by all means.

I don't really see what choice the chancellor had. It seems a limited budget constrained by the absence of clarity on the effects of Brexit. Let's ignore the lack or otherwise of a plan for now.

What it does signal is perhaps an ear for the cry of pain from the dispossessed and marginalised Brexit voter. And for that I am entirely supportive.
Post edited at 08:54
krikoman - on 24 Nov 2016
In reply to Jon Stewart:

Nice to see they've back tracked on "it's a terrible idea to borrow for infrastructure building" (a Labour idea).

Maybe they'll privatise the Trains again, and energy supply, perhaps they're actually learning something!!


(Wishful thinking I know, but always the optimist)
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Xharlie on 24 Nov 2016
In reply to BnB:

How about choosing to divert money from "defense" to these other things instead of either cutting the funding to these other things ("austerity") or borrowing to pay for all of them?

On another note, this whole debacle about "national debt" is a red herring. It works very well as a motivator for politicians looking to shove austerity down the throats of an unwilling public but thinking that the national debt will fall in any measurable way in the short term (or even that it should fall) is completely bonkers. The whole concept is funny-money anyway and if the relation to GDP is a worry, the solution should be raising GDP!

Borrowing against national debt, simultaneously implementing Q.E. and using the new-found cash to buy unusable military hardware is scam upon scam upon scam at the publics expense.
GrahamD - on 24 Nov 2016
In reply to Jon Stewart:

Do you see a massive shift in spending policy or taxation policy in real terms ? I don't. All that has changed is the payback projections based on less optimistic economic outlook. I don't suppose Hammond is happy with that. Being a chancellor is a lot easier in a boom.

A real hard line Conservative chancellor faced with current projections might have tightened the purse strings further.
Shani - on 24 Nov 2016
In reply to GrahamD:
> A real hard line Conservative chancellor faced with current projections might have tightened the purse strings further.

Not with interest rates at or near the zero lower bound s/he wouldn't. Although if s/he was a historian rather than a macroeconomist, maybe he would.
Post edited at 10:01
John_Hat - on 24 Nov 2016
In reply to Jon Stewart:
On this subject, incidentally, my view is that the tories did a very unpleasant thing indeed.

They used, and in fact fanned, the ignorance of the population on macroeconomic matters [1] in order to persuade the public that a politically motivated attack on the most vulnerable in society was a good idea. [2]

The media let them get away with it as journalists (especially journalists?) don't get it either. Or they find a soundbite that "we're living beyond our means!!!!" gets the punters paying. There's exceptions and good journalism in places (some of which I've referenced below), but they are the exceptions.

Labour tried to oppose austerity, but were too busy backstabbing and in-fighting to really mount a credible challenge.

As a result the f*cking tories (I'm angry about this) managed to get away with, literally, murder.

http://www.independent.co.uk/life-style/health-and-families/features/austerity-cuts-are-causing-ment...

https://www.sciencedaily.com/releases/2015/10/151006085437.htm

https://www.theguardian.com/society/2013/may/15/recessions-hurt-but-austerity-kills

http://www.salon.com/2015/08/09/austerity_kills_the_sad_sick_truth_about_right_wing_economics_body_c...

http://www.nytimes.com/2013/05/13/opinion/how-austerity-kills.html


Blair looked unhappy when accused of having blood on his hands. The current Tory government has as well.




[1] Which basically says that governments don't work like personal finance AT ALL. For example, people are not immortal, and can't print their own money. I'm aware there are consequences in increasing the money supply, but the point stands that talking about gvt finances in terms people use to describe personal finances is highly misleading and simply plain wrong. See:

http://blogs.reuters.com/great-debate/2013/01/14/why-public-debt-is-not-like-credit-card-debt/

http://www.nakedcapitalism.com/2009/10/all-debt-is-not-created-equal-government-debt-is-not-the-same...

http://www.nytimes.com/2012/01/02/opinion/krugman-nobody-understands-debt.html

https://econproph.com/2011/07/14/private-debt-vs-government-debt/

[2] In short, that if you make things unpleasant enough for them then desperate people will do anything to fund their lives. This has consequences, notably on mental illness, suicide and crime rates. None of which are likely to be suffered by tory MPs. I have a problem with the morality of this.
Post edited at 10:43
RomTheBear on 24 Nov 2016
In reply to BnB:

> What it does signal is perhaps an ear for the cry of pain from the dispossessed and marginalised Brexit voter. And for that I am entirely supportive.

According to the resolution foundation analysis, the bottom third of earners will see their real income fall as a result of the welfare, tax and spending changes announced.
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Bob Kemp - on 24 Nov 2016
In reply to DerwentDiluted:
"exports of milk and honey" - and don't forget the jam!
marsbar - on 24 Nov 2016
In reply to krikoman:

That my dear is an insult to warm, loving, see you next Tuesdays everywhere. They are worse than that.
GrahamD - on 24 Nov 2016
In reply to RomTheBear:

> According to the resolution foundation analysis, the bottom third of earners will see their real income fall as a result of the welfare, tax and spending changes announced.

As a result of changes announced or as a result of the deteriorating economy ? Has anyone's real income incresed (ignoring the statistically insignificant corner cases that people seem to fixate on like MPs, CEOs and premiereship footballers)
jkarran - on 24 Nov 2016
In reply to MG:

> You're obviously right. As a result of this and myriad other things, Corbyn has possibly the easiest job of any opposition leader ever right now and is really taking it to the government. Oh, no, my mistake, sorry.

It's not so easy to attack Hammond for an about face that essentially brings the Conservatives in line with the basic thrust of Labour's economic policy. They obviously can't attack the policy and attacking the U-turn leads inevitably to discussion of the fairly similar Labour policy and to accusations of hypocrisy. Yeah Labour are basically invisible at the moment but this mini-budget isn't the open goal you suggest.
jk
Postmanpat on 24 Nov 2016
In reply to Jon Stewart:

OK, I'll bite.

The first and most obvious point is that this is a different administration so there is not a contradiction in pursuing different policies. Having said that, you know very well that Hammond is not "maxing out the credit card". He is decelerating the speed of deficit reduction, not abandoning it. It's simple pragmatism.

The second point is that this is a completely different situation to 2009 and that, according to the OBR, we face a completely different outlook to that of 6 months ago: When the facts change, you change your mind.....

1) The cornerstone of Osborne's policy was to rely primarily on monetary policy to stimulate growth which would enable fiscal policy to be tightened. It is widely thought across the globe that monetary easing has gone as far as it can, and that although it has served to "keep the boats afloat" it has not delivered strong enough growth. There has thus been for some time a belief that fiscal policy needs to be loosened globally.

2) In 2009 Osborne faced a fiscal deficit of 10% of GDP. Quite obviously that had to be brought under control. It's now nearer 4 % so there is more room to show flexibility.

Personally I think Osborne was hoist by his own petard in that he promised further tightening ahead of an election that he didn't expect to win outright and thought that the Libdems would water his proposals down. His Northern Powerhouse stuff was all part of a stealth trend of using to use fiscal policy to stimulate the economy and that is essentially what Hammond is now creeping towards.
RomTheBear on 24 Nov 2016
In reply to GrahamD:

> As a result of changes announced or as a result of the deteriorating economy ? Has anyone's real income incresed (ignoring the statistically insignificant corner cases that people seem to fixate on like MPs, CEOs and premiereship footballers)

It's just the impact of the changes to tax, welfare and spending.
Yes the upper middle should see a positive impact from the changes announced. Only the top 10% are much worse off than the bottom third.
1
neilh - on 24 Nov 2016
In reply to Postmanpat:

You also need to ask yourself if we had not adopted the cuts what would be the govts financial position now? Not very good.Far worse than it is.

After yesterday I think to myself. 3 more years and we might have been in surplus. Maybe we should have just stuck with it.
neilh - on 24 Nov 2016
In reply to GrahamD:

Or increased taxes.
alastairmac - on 24 Nov 2016
In reply to Jon Stewart:
I think the statement yesterday underlined that far from shaping events and "taking back control" the current government can only respond to events. Hammond is adopting a more sensible and interventionist approach to stimulating the economy because he has no choice. But it's too little, too late. For the last six years an economically illiterate "austerity" programme has undermined our economy, our institutions and the very fabric of our welfare state. It's been an act of irresponsible vandalism on a vast scale. To reverse that will need bold politicians prepared to invest imaginatively and talk down the mob mentality that seems prepared to accept unlimited economic and social damage in exchange for an idealogical shift. At the moment bold politicians seem in short supply. As do politicians capable of explaining what our industrial priorities are. Frankly it's a mess and we need a credible opposition and viable alternatives quickly.
Post edited at 13:57
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Shani - on 24 Nov 2016
In reply to neilh:

> You also need to ask yourself if we had not adopted the cuts what would be the govts financial position now? Not very good.Far worse than it is.

Perhaps we'd be much better off through tax receipts from economics activity stimulated throughout the economy from large scale capital investments, rather than letting the fruits of QE go straight to the wealthy?
John_Hat - on 24 Nov 2016
In reply to neilh:

> You also need to ask yourself if we had not adopted the cuts what would be the govts financial position now? Not very good.Far worse than it is.

> After yesterday I think to myself. 3 more years and we might have been in surplus. Maybe we should have just stuck with it.

The above is an example of the economic illiteracy.

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neilh - on 24 Nov 2016
In reply to John_Hat:

You can have a
neilh - on 24 Nov 2016
In reply to Shani:

You mean like in Japan. All that meaty infrastructure spending, and really still at a standstill.

I agree there is a case for some.
John_Hat - on 24 Nov 2016
In reply to neilh:
> You can have a

I'm not quite sure what you mean by that. I stated that your post indicated economic illiteracy.

Your statement that "if we had not adopted the cuts what would be the govts financial position now? Not very good.Far worse than it is" and "3 more years and we might have been in surplus" rather indicates you are - as stated in my previous post - confusing government and personal debt. This is fundamentally incorrect.

By "fundamentally incorrect" - to remove any shadow of a doubt - I mean you don't know what you are talking about.

Have a smiley .

Incidentally, if the above sounds harsh, I'm OK with that. As the result of the austerity policies that (going on the "if we had not adopted the cuts what would be the govts financial position now? Not very good.Far worse than it is" - you agree with) then millions of people have been callously sacrificed on the alter of a political ideology which just doesn't give a sh*t about the human cost of its actions.
Post edited at 14:31
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neilh - on 24 Nov 2016
In reply to John_Hat:



The forecast was for a govt surplus in 3 years time, this has been moved back/adjusted .I am not talking about personal debt.
John_Hat - on 24 Nov 2016
In reply to neilh:
I know you're not talking about personal debt. I said you are equating the positives and negatives of personal and governement debt.

OK, I'll try and explain.

Basically there are fundamental differences betwene the two which mean that debt, for a government, is not bad.

The servicing payments will take a chunk of tax revenue, and that particular merry-go-round can get out of hand, but we are at historically very low levels of debt and servicing now, which means that we really, really, didn't need austerity.

See graphs below.

http://www.ukpublicspending.co.uk/uk_national_debt_chart.html

In addition, if the government borrows in pounds, it can simply print more pounds to pay off the debt. Yes there are consequences to that, but I as an individual can't do that. Hence I am constrained by my money supply (income) and a government is not.

Also, I have a constrained lifespan. If I don't pay off my debt by the time I retire I have a problem. Governements and their income-generating proles (that's us) don't ever retire, so are effectively immortal.

There's a lot of other differences to do with the tax base, multipliers, etc, I'm not going into. Mainly because it's been a while since I studied them and I'd have to refresh myself to get the detail right.

I'm aware there's a lot of simplifications in the above, but that's so I don't end up writing a 2,000 word post... however some of the links in my previous post might be helpful.
Post edited at 15:04
Shani - on 24 Nov 2016
In reply to neilh:
> You mean like in Japan. All that meaty infrastructure spending, and really still at a standstill.

You're unaware of Japan's post-industrialisation problems which Abe is attempting to redress; relaxing immigration controls, altering work culture, integrating technological research with commercial opportunities and increasing the country's workforce by encouraging women in the workplace.
Post edited at 15:11
Mike Stretford - on 24 Nov 2016
In reply to John_Hat:
> I know you're not talking about personal debt. I said you are equating the positives and negatives of personal and governement debt.

I don't see how you came to that conclusion from what he typed.

> Basically there are fundamental differences betwene the two which mean that debt, for a government, is not bad.

If you'd typed 'may not be bad', maybe.

None of us has a crystal ball, borrowing costs may rise sharply, there may be another financial crisis. That's not to say we shouldn't borrow now, thanks to the Union Jack undie wearing lot. However, due to the UKs unique set of issues (low productiviy, huge trade defecit, future uncetainty), I don't think it is a pill we can just keep taking.
Post edited at 15:36
neilh - on 24 Nov 2016
In reply to Shani:

I deal with Japanese companies and visit there ( I had one at my place a month ago - nice order exporting there) so am very aware of the issues. True that is what he is doing now, but since their banking crises they tried infrastructure spending and it just led to a stagnant economy which Abe is now tring to address.

Unfortunately from my personal observations, woman are very "downtrodden" in the workplace. But a different subject.
neilh - on 24 Nov 2016
In reply to John_Hat:

I am well aware its very complex

I would just like to see a surplus, no matter how small.Its a personal gripe.I know there is a social cost etc.

I would like to see productivity rise. It is imho the one area that could really make a difference all round.Otherwise its stagnant wages for ever as is now predicted.

i will read your earlier posts sometime.


neilh - on 24 Nov 2016
In reply to John_Hat:
If you wanted to know what really hacks me off in the budget its the announcement of extra money for R and D which includes an Industrial Strategy Challenge Fund (ISCF) for collaborative research between industry and academia targeted at priority technologies.

As an sme I am targetted by one of the universities who want to collabrate with me in composite research( emerging technology). Minefield as the department is crawling with foreign govt funded students doing PhD's who will just nick UK generated commercial ideas.Talk about a conflict of interest.Unreal.

That comment should stoke up a load of heated replies from the academic posters on the forum.
Shani - on 24 Nov 2016
In reply to neilh:

> I deal with Japanese companies and visit there ( I had one at my place a month ago - nice order exporting there) so am very aware of the issues. True that is what he is doing now, but since their banking crises they tried infrastructure spending and it just led to a stagnant economy which Abe is now tring to address.

Ok, so given those material differences in our respective economies you'll understand my frustration that you should simply respond to the concept of infrastructure spending with "You mean like in Japan. All that meaty infrastructure spending, and really still at a standstill."?

BnB - on 24 Nov 2016
In reply to RomTheBear:

> According to the resolution foundation analysis, the bottom third of earners will see their real income fall as a result of the welfare, tax and spending changes announced.

Don't the forecasts suggest that everyone will? Surely the main policy point delivered yesterday and signposted for months beforehand was that the Treasury will react in potentially non-Austere ways to potential negative circumstances arising from Brexit. You can't measure that so it won't show in a forecast that only looks at the quantifiable changes announced.
BnB - on 24 Nov 2016
In reply to GrahamD:

> As a result of changes announced or as a result of the deteriorating economy ? Has anyone's real income incresed (ignoring the statistically insignificant corner cases that people seem to fixate on like MPs, CEOs and premiereship footballers)

Pretty much everyone in the IT sector, almost without exception. Wages are approaching 200% of the pre-2000 level for a high proportion of skill subsets. I have about 210 IT workers and 30 years in the sector so I really am talking from relevant experience. As for mine, well, I'm a CEO so not statistically significant.
The New NickB - on 24 Nov 2016
In reply to BnB:

> Pretty much everyone in the IT sector, almost without exception. Wages are approaching 200% of the pre-2000 level for a high proportion of skill subsets. I have about 210 IT workers and 30 years in the sector so I really am talking from relevant experience. As for mine, well, I'm a CEO so not statistically significant.

2008 is the key date and for most workers, inflation adjusted wages are well, well below 2008 levels.
MG - on 24 Nov 2016
In reply to neilh:

Interesting. Have you spoken to the department about your concerns? I've worked with various sensitive projects and universities have always taken data/IP security seriously for these.
BnB - on 24 Nov 2016
In reply to The New NickB:

IT wages have grown faster (and I mean MUCH faster) since 2008 than in the period from 2000 - 2008. In fact it was almost as if the financial crisis and great depression caused rampant wage inflation in IT, so close was the association (in temporal terms). Maybe the shock of October 08 caused companies to completely review their future strategies and commit big time to technology. Then again it could just be a coincidence of two parallel revolutions.
Jon Stewart - on 24 Nov 2016
In reply to John_Hat:

Thanks for all those links. Difficult to disagree with...
Tyler - on 24 Nov 2016
In reply to BnB:
> IT wages have grown faster (and I mean MUCH faster) since 2008 than in the period from 2000 - 2008. In fact it was almost as if the financial crisis and great depression caused rampant wage inflation in IT, so close was the association (in temporal terms). Maybe the shock of October 08 caused companies to completely review their future strategies and commit big time to technology. Then again it could just be a coincidence of two parallel revolutions.

Do you have figures on this? Maybe networks (don't know not my area) but in about 2002 we were advertising TA roles at about 60-70k and that's not too far off the current salary. Likewise contract rates for most jobs with 10 years experience seem to hover around 350 to 450 a day (in the north), jobs over 500 per day are rare except for very senior prog manger roles and certain skills. Makes sense given the number of IT grads and also off shoring. I read a few years back how the number of IT jobs (not sure how defined) was going to fall from 16 million at its peak to 4 million, obviously that's unlikely but I'm not seeing much wage inflation without moving jobs, and most roles I've been asked about lately are offering no more now than when I moved to this one 4 years ago.

Since I've been with this company I've had two pay increases one of 2% and one of 1%, both of these were based on performance, i.e. I'd have got nothing if my annual review had been scored average or below
Post edited at 20:25
BnB - on 24 Nov 2016
In reply to Tyler:

The really trustworthy hard data I have to hand is my employee payroll and for obvious reasons that stays confidential but Google will offer you plenty of surveys pitching annual wage growth in recent years at 3-4%. That'll double your salary in 18 years or so. You'll accelerate your wage fastest by moving often, though I don't recommend that strategy for any other reason, least of all job fulfilment.
Jon Stewart - on 24 Nov 2016
In reply to GrahamD:

> Do you see a massive shift in spending policy or taxation policy in real terms ? I don't.

Nor do I. But I do see a total unraveling of a political ideology; the exposure of a lie of outrageous proportions. The suffering that has been caused in the name of paying back the national debt it turns out, was unnecessary.

I'm not angry about the policy u-turn, I'm very happy. I'm just aghast at the brazen dismissal of the false, vindictive destructive ideology that underpinned 6 years of inflicting misery on vulnerable people, as if it didn't matter that it was all a lie.

Tories: you cannot have it both ways. Either the suffering caused by taking away vulnerable people's means of living independently is *necessary* and the consequences of not doing this are unthinkable (borrowing); or borrowing more to fund what we need is OK. These two possibilities cannot both be true.

> All that has changed is the payback projections based on less optimistic economic outlook.

No. The whole set of principles on which policy across govt was driven for 6 years has been exposed as false. It was a lie. That is what has changed.

If what you were saying was true, the policy would have been: We're trying to reduce spending, but if it all goes tits up and growth does not materialise (or, some pig-f*cker calls a pointless referendum which sets the economy on a track to the bottom of the Mariana Trench), then we'll have to borrow more. That isn't what I heard. Is it what you heard?

Jon Stewart - on 24 Nov 2016
In reply to Postmanpat:

> The first and most obvious point is that this is a different administration so there is not a contradiction in pursuing different policies.

It's not so much different policies as completely rubbishing the philosophy that underpinned all of the policies of the previous administration. That is the whole point, as I have explained.

> Having said that, you know very well that Hammond is not "maxing out the credit card". He is decelerating the speed of deficit reduction, not abandoning it.

Well, it's quite different actually. "We're very concerned about eliminating the deficit, but not actually so concerned that we'll put any time limitation at all" is Labour policy. The previous Tory lot took a completely different stance that used time-limited deficit elimination as a fundamental around which all policy revolved - and as such was the justification for the unjustifiable policies in welfare reform.

> The second point is that this is a completely different situation to 2009 and that, according to the OBR, we face a completely different outlook to that of 6 months ago: When the facts change, you change your mind.....

I've responded to this point several times upthread. The facts have not changed in the right direction to justify the policy change within the framework of the same political and economic philosophy, as I said:

> This isn't a little policy u-turn where what sounded like a good idea turned out to be unpopular for reasons that weren't anticipated. This is a rubbishing of 6 years of economic strategy, a whole ideology with drastic human consequences binned as if it just doesn't matter. No explanation. No apology. Just "oh, actually, it doesn't matter".

> To paint that as a humble adjustment of policy in the face of new information is f*cking ridiculous, and you know it.

Back to:

> 1) The cornerstone of Osborne's policy was to rely primarily on monetary policy to stimulate growth which would enable fiscal policy to be tightened...

> 2) In 2009 Osborne faced a fiscal deficit of 10% of GDP. Quite obviously that had to be brought under control. It's now nearer 4 % so there is more room to show flexibility.

I think these points are quite reasonable and I applaud the change in policy (and think it should go further). It's rather a shame that we didn't hear about how there was actually quite a lot of wriggle-room in terms of acceptable levels of borrowing earlier, *before* the basic support for vulnerable people living their lives was dismantled. Don't you think now is a bit late to let on?
BnB - on 24 Nov 2016
In reply to Jon Stewart:

I see merit in a good number of your points but politicians are driven by votes more than principle. I'm not justifying this in a moral sense but you must acknowledge that every time Osborne championed Austerity his approval ratings soared. Meanwhile, in the only true test of popularity, a general election, the Austerity-promoting incumbent government was returned to power with an increased mandate. For all that Osborne and co should have recognised the harm they were doing to people's lives, from the people and other sources, including the IMF and other central banks, they were receiving plenty of encouragement.

Compare that approval with the face slap of the referendum just a year later and you witness both the split in today's society and the challenges of leadership.
Jon Stewart - on 24 Nov 2016
In reply to BnB:

> I see merit in a good number of your points but politicians are driven by votes more than principle. I'm not justifying this in a moral sense...

You make perfect sense. From a moral perspective, it makes me want to throw up all my internal organs, but as you rightly point out, that's secondary to the business of gaining/retaining power. Perhaps members of the govt (old and new) feel precisely this way...in which case I suppose I should at least give them credit for experiencing the visceral moral revulsion, even if they lack any hint of backbone or integrity to act on it?
RomTheBear on 25 Nov 2016
In reply to BnB:
> Don't the forecasts suggest that everyone will? Surely the main policy point delivered yesterday and signposted for months beforehand was that the Treasury will react in potentially non-Austere ways to potential negative circumstances arising from Brexit. You can't measure that so it won't show in a forecast that only looks at the quantifiable changes announced.

You are mixing things up, This is not a forecast, this is simply looking at the impact of the changes to welfare, tax and spending on income. And the impact is negative for the bottom third. No suprise there, this is not new and was the same with Osborne.

If you want to look at economic forecast yes there are quite a few, and they are all look pretty dire for workers.
Post edited at 00:31
summo on 25 Nov 2016
In reply to RomTheBear:

> And the impact is negative for the bottom third. No suprise there, this is not new and was the same with Osborne.
> If you want to look at economic forecast yes there are quite a few, and they are all look pretty dire for workers.

I'm not convinced that this wouldn't be the case no matter who was in government or their policy.

But, is the west or has it peaked, cheaper production beyond Europe will only continue to take more work from the lower skilled & less educated end of the market, especially manufacturing etc... Cheap production has kept the prices of most goods in the west down and thus inflation, meaning average joe has a standard of living and can afford mod cons now that a 70 or even 80s house wife/husband only dreamed of.

The question is how do you make the richest 5% see a greater slide in their standards than the poorest, so at the end of the western decline it is more equal. In our desire to get every thing cheaper goods, we've allowed giant global corporations to gobble up their suppliers, component manufacturers & producers, their logistic chain their retailers etc.. So we now get the absolute cheapest possible priced goods, but to achieve it, people are squeezed at every stage of the process, if we keep buying cheap from certain companies then we compound the very problem we dislike. The problem is most of us are hypocrites, deploring the rich elite whilst posting on facebook, having googled our information on the last smart phone, that was purchased on amazon.

Some global companies and their top earners are effectively more powerful and influential than some smaller countries, or even a collection of countries because of their lobbying power. These people and companies aren't going to give up their power. Just a few companies control so much; Walmart, Berkshire Hathaway, Wells Fargo, GE, Morgan Chase, Exxon, Apple, Shell, Chevron, Monsanto bayer..... this is where the real power lies. People like Trump are just minnows in this game.

RomTheBear on 25 Nov 2016
In reply to summo:

> I'm not convinced that this wouldn't be the case no matter who was in government or their policy.

You don't get it. It's a distributional analysis of the policy itself, so of course it matters what the policy is.

As far the rest of your rant it's off topic.

Postmanpat on 27 Nov 2016
In reply to Shani:

> You're unaware of Japan's post-industrialisation problems which Abe is attempting to redress; relaxing immigration controls, altering work culture, integrating technological research with commercial opportunities and increasing the country's workforce by encouraging women in the workplace.

We must stop treating Japan as some special case that has no lessons for the rest of us. (How often did we hear of their lost decade in the 1990s that it couldn’t happen anywhere else.) Japan has had supply side issues since long before the lost decade but managed to achieve growth and to stimulate growth through fiscal stimulus in previous decades. And yet, post 1989 fiscal stimulus failed the achieve consistent growth in Japan. The reasons are more complicated than simply the old "japan is unique" argument. Many of the lessons of Japan are probably applicable globally.
Shani - on 27 Nov 2016
In reply to Postmanpat:

Largely agree. See my post 1455 Thursday.
Postmanpat on 27 Nov 2016
In reply to Shani:

> Largely agree. See my post 1455 Thursday.

I think that's what I replied to. You seemed to be attributing the failure of Japan's various fiscal stimulii in the 1990s and later to Japan specific supply side problems. I suspect that they are much more the result of the difficulties in targeting fiscal stimulus effectively to achieve a multiplier effect,and the difficulties of stimulating borrowing in the midst of a balance sheet recession, both of which problems would have and probably will reduce the impact of fiscal stimulus in the UK. Which is not to say that the time hasn't come........

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