the Elephant in the room

[abc]

What on earth does your comment mean in relation to the post you quoted?

My comment was in response to HT's reply to Captain Dave's view that the AA was effectively lost under labour due to their over spending habits. HT reposnded with "Oh yeah, and the credit ratings agency just sat on this until they decided to announce it yesterday? You're talking shit."

Firstly it is FACT that the reason for the down grading is the UK's level of debt. This was built up under Labour and handed to the coalition. Clearly the coalition have failed to reduce it but Labour created it. Therefore the roots of the downgrade were under Labour. Not a political statement but a fact.

Secondly it seems that HT has a habit of insulting (see how many time his responses in this thread have included terms such as 'fu***ng twat', your talking sh*t etc anyone who disagress with him or makes a point that doesnt fit in with the 'Labour line'. Given this is a thread discussing economics it seems obvious that resorting to this sort of 'argument' shows a lack of ability to engage in the debate due to a lack of economic knowledge or an ability (hence blinkered) to consider any other view.

 

[beorhthelm]

... it was the baling out of the banks that left the big hole in the public finances, not the supposed Labour over-spending in the preceding years. And it's the banks and the rich who benefited from the bubble for so long who ought to be being squeezed now to mend the public finances, not the ordinary Joe.

the "big hole" was for £70bn one year. the previous annual budget defecit and subsequent £100-170bn deficit is down to planned spending. perpetuating the myth that it was only the banks that created a deficit wont make it true. and the government, middle and working classes who benefitted from the bubble too, with cheap credit, 110% mortgages etc. we all had our hand in the cookie jar.

 

[Herr Tubthumper]

My comment was in response to HT's reply to Captain Dave's view that the AA was effectively lost under labour due to their over spending habits. HT reposnded with "Oh yeah, and the credit ratings agency just sat on this until they decided to announce it yesterday? You're talking shit."

Firstly it is FACT that the reason for the down grading is the UK's level of debt. This was built up under Labour and handed to the coalition. Clearly the coalition have failed to reduce it but Labour created it. Therefore the roots of the downgrade were under Labour. Not a political statement but a fact.

Secondly it seems that HT has a habit of insulting (see how many time his responses in this thread have included terms such as 'fu***ng twat', your talking sh*t etc anyone who disagress with him or makes a point that doesnt fit in with the 'Labour line'. Given this is a thread discussing economics it seems obvious that resorting to this sort of 'argument' shows a lack of ability to engage in the debate due to a lack of economic knowledge or an ability (hence blinkered) to consider any other view.

a) The f***ing twats comment was aimed at the Government. Did this really offend YOU?
b) This is a quote from Moodys regarding the downgrading:“After it was elected in 2010, the Government outlined a fiscal consolidation programme that would run through this parliament’s five-year term and place the net public-sector debt-to-GDP ratio on a declining trajectory by the 2015-16 financial year. Now, however, the Government has announced that fiscal consolidation will extend into the next parliament, which necessarily makes their implementation less certain.” You will see that the down grading is related to the current government not meeting the terms of it's own programme. This differs from the 'FACT' you claim.
c) If a comment like 'you're talking shit' offends you then maybe NSC is not for you? I do not have a habit of insulting people, other than Bushy, but he gives as good as he gets.
d) regarding b, you are still talking shit.

 

[User removed 4]

a) The f***ing twats comment was aimed at the Government. Did this really offend YOU?
b) This is a quote from Moodys regarding the downgrading:“After it was elected in 2010, the Government outlined a fiscal consolidation programme that would run through this parliament’s five-year term and place the net public-sector debt-to-GDP ratio on a declining trajectory by the 2015-16 financial year. Now, however, the Government has announced that fiscal consolidation will extend into the next parliament, which necessarily makes their implementation less certain.” You will see that the down grading is related to the current government not meeting the terms of it's own programme. This differs from the 'FACT' you claim.
c) If a comment like 'you're talking shit' offends you then maybe NSC is not for you? I do not have a habit of insulting people, other than Bushy, but he gives as good as he gets.
d) regarding b, you are still talking shit.

like a dagger piercing my heart .

 

[abc]

a) The f***ing twats comment was aimed at the Government. Did this really offend YOU?
b) This is a quote from Moodys regarding the downgrading:“After it was elected in 2010, the Government outlined a fiscal consolidation programme that would run through this parliament’s five-year term and place the net public-sector debt-to-GDP ratio on a declining trajectory by the 2015-16 financial year. Now, however, the Government has announced that fiscal consolidation will extend into the next parliament, which necessarily makes their implementation less certain.” You will see that the down grading is related to the current government not meeting the terms of it's own programme. This differs from the 'FACT' you claim.
c) If a comment like 'you're talking shit' offends you then maybe NSC is not for you?
d) regarding b, you are still talking shit.

No offence caused at all. However I retain my opinion regarding your grasp of economics and blinkered political view point.

But moving on.....

Do you think anyone really knows what to do or even whether there is a 'solution' at all rather than facing up to the fact that our and many other economies are going to be in the doldrums for many years. Maybe the political party that faces up to this and then comes up with a plan as to how we will cope with this new reality (especially with a view to those at the bottom of the pile) will be the right one. I don't think any of them are doing this.

 

[sten_super]

Quite. Just like they are now pretending they did not put much significance on the AAA when it was pretty much the single argument for their austerity program (aka strangling the economy) back in 2010. Which ever way you dress things up you cannot get away from the fact that things are much much worse now than they were when the Tories took over and they said they'd have improved things by now.

The knives will be out for these two clowns shortly. I cannot see the Tory grandees sitting silently as their hopes of a re-election go down the drain. And then, as usual with Tory in-fighting it will be game over.

I'd agree that it's very bad for the senior Tories that made those initial claims. However I think that the numbers, and the downgrading, have to be read in the wider context. The global economy is performing very sluggishly - growth has slowed in China and India as well as the 'developed' markets. It was a widely-held view that a strong global recovery would take place, and the UK would benefit from trade into active markets. Growth has stalled or stopped in almost all markets and exports aren't increasing as was initially forecast. On the downgrade - I never understood why the Tories made the rating a central plank of their argument; it was clear that some nature of rebalancing was necessary, and I suppose the credit rating provided a very clear metric for success (or, as turned out, otherwise) - but really it was never about the credit rating (accepting that, of course, they had to maintain some level of credibility and avoid a Greek-style situation, but that was never on the cards).

Fundamentally austerity was always about imposing a Tory view on the country, in the same way that Labour imposed their own view previously - the credit rating was just the window dressing to make it palatable to the electorate. The same, IMHO, is true of the timetable - balancing the budget within one parliament was always going to be extremely difficult (because, no matter what the Tories would have had you believe, there was no evidence of the public sector 'crowding out' the private sector to the extent that would have been required to achieve economic growth alongside public sector cuts) - but saying from the outset that it was going to take 10 years would have been difficult for the electorate to take and (I assume) not taken well by the financial markets, as it would show more space for wiggle room as well as highlighting the possibility of the Tories losing the next election and austerity being weakened or removed.

 

[Titanic]

a) b) This is a quote from Moodys regarding the downgrading:“After it was elected in 2010, the Government outlined a fiscal consolidation programme that would run through this parliament’s five-year term and place the net public-sector debt-to-GDP ratio on a declining trajectory by the 2015-16 financial year. Now, however, the Government has announced that fiscal consolidation will extend into the next parliament, which necessarily makes their implementation less certain.” You will see that the down grading is related to the current government not meeting the terms of it's own programme. This differs from the 'FACT' you claim.

I read that as saying that, because the present effective but slow policy of defecit reduction will not be completed before the next General Election, there is a risk that the policy will not be seen through to completion (if, God forbid, Ed Bollx got his hands on the British economy!) and therefore they cannot be as certain as they previously were, that the objectives will be met.

 

[abc]

I read that as saying that, because the present effective but slow policy of defecit reduction will not be completed before the next General Election, there is a risk that the policy will not be seen through to completion (if, God forbid, Ed Bollx got his hands on the British economy!) and therefore they cannot be as certain as they previously were, that the objectives will be met.

This is correct. Moody's concern is the coalition are not being hard in enough in the austerity drive and not reducing the debt fast enough. Labour want to borrow more so that wont help and if the Tories try to make any deeper cuts then they will blow any remaining chance they might have at the next election.

So you either take the view that the ratings are not important or the view that they are and we are totally buggered!

 

[loz]

To Save The British Economy, David Cameron Will Have To Do The Hardest Thing For Any Politician To Do - Business Insider

the brilliant pseudonymous finance twitter/blogger @barnejek, asks if Britain has finally cornered itself with its current mix of policy.

He starts by noting...

I would like to thank the British government for conducting a massive social experiment, which will be used in decades to come as a proof that a tight fiscal/loose monetary policy mix does not work in an environment of a liquidity trap. We sort of knew that from the theory anyway but now we have plenty of data to base that on.This idea that Britain has conducted a huge social experiment is not spoken loudly, since it's insensitive, but it's one that economists have talked about. People like that Britain has blown its recovery, because it shows that the theory behind austerity is bunk.After walking through some slightly technical economics, he goes on to argue that the only hope now is that Britain take a "stop loss" on its austerity agenda, and spend more.

 

[abc]

Here's a thought....

Increase the minimum wage by say 20%. This wouldn't hit honest fair employers very hard as they will be paying above the minimum wage anyway. Therefore there shouldn't be a damaging inflationary effect. However the lowest paid, who are usually the one's being taken advantage of, would see a useful increase in their income. They would spend this as they will still be a way of having enough cash to save. This extra spending would boost the economy whilst helping those who are struggling most with austerity. Tax receipts would also rise helping the gov to reduce the debt. This would protect our low interest rates thus helping business and mortgage holders. As it it would be universal it won't damage business competitiveness internally and exporters will be benefiting from a weaker pound at the moment. Therefor they should be able absorb the increased wage cost.

It's obviously too simple but....

 

[Stat Brother]

[tweet]306067757148033024[/tweet]

 

[Ernest]

Abolish housing benefit for all full time workers then either the landlords have to charge their rents at a rate ordinary people can afford or there will be thousands homeless and something will have to be done

 

[matthew]

In many ways these ratings seem to be arbitrary, we are in a stronger position now than we were last year

 

[beorhthelm]

I read that as saying that, because the present effective but slow policy of defecit reduction will not be completed before the next General Election, there is a risk that the policy will not be seen through to completion

yep, alot of economists think the problem with the austerity is that it doesnt go nearly far enough. they'll point out the spending is still increasing in all areas, just not as quickly as before, the only cuts we see are to the rate of increase. of course they look at it through the prism of mathematical models and dont concern themselves too much with the impact, and they'll change their mind a couple of years later (like the IMF - UK needs to cut!... UK needs to spend) without having to face a vote.

 

[Beach Hut]

I just love the self-denial of Red Wedge, next you will be showing us where those weapons of mass destruction are

 

[Pondicherry]

There is no easy way out of where we are at the moment. Basically we are uncompetitive because we dont work hard enough. We are at economic war with the rest of the world and we no longer have a large technological advantage. We need to cut taxes and massively reduce the welfare state to incentivise people to work harder / smarter. Sadly, no government will be brave enough to do this and so we face slow long term decline.

Eventually it will not matter though because no contained system like the earth can support economic growth forever (unless we perfect cold fusion).

 

[jgmcdee]

I never understood why the Tories made the rating a central plank of their argument

Because it was a great justification for anything that they wanted to do: "we have to do this our we will lose our rating".

And given that the stuff they've done over the past few years has been driven by their ministers' own individual agendas rather than a coherent government strategy, let alone what used to be the Tory ideology of decentralisation and capitalism, it's no surprise that we're further in to the hole now than we were three years ago.

 

[Tubby Mondays]

I just love the self-denial of Red Wedge, next you will be showing us where those weapons of mass destruction are

Red Wedge?!

It was only 30 years ago.

 

[Albumen]

I just love the self-denial of Red Wedge, next you will be showing us where those weapons of mass destruction are

IDS and the 'Blue Wedge' were as much behind the Oil war as Blair was. Kennedy was sitting on the fence. What this has to do with Georges obvious economic ineptitude I have no idea.

 

[Herr Tubthumper]

Here's a thought....

Increase the minimum wage by say 20%. This wouldn't hit honest fair employers very hard as they will be paying above the minimum wage anyway. Therefore there shouldn't be a damaging inflationary effect. However the lowest paid, who are usually the one's being taken advantage of, would see a useful increase in their income. They would spend this as they will still be a way of having enough cash to save. This extra spending would boost the economy whilst helping those who are struggling most with austerity. Tax receipts would also rise helping the gov to reduce the debt. This would protect our low interest rates thus helping business and mortgage holders. As it it would be universal it won't damage business competitiveness internally and exporters will be benefiting from a weaker pound at the moment. Therefor they should be able absorb the increased wage cost.

It's obviously too simple but....

It's a nice idea but the 20% increase in the minimun wage will be lost when the next round of energy tariffs are announced.