Politics

[Toonpack 9945]

They said that when the spinning Jenny was invented too. Please spare me your anecdotes, they're not meaningful.

 

Of course they are meaningful, I work in a "globalisation'd" environment for fucks sake. Unpalateable as it may seem to a "textbook warrior", I see this shit happening, I've done this shit for a living for the thick end of 20 years, I am responsible for, and have been responsible for multi million $$$ budgets that buy this type of shit, and those budgets are built up from the best bang for your buck available from anywhere on the planet and the technology makes the "anywhere on the planet" easier and easier.

 

There's a hell of a lot of difference between the invention of the seed drill/cotton jenny/steam engine and the at the time alternative employment opportunities "in the cities or industries". The burgeoning technology that replaces the need for folks also allows the residual activities, that do need folks, to be done in any place on the face of the planet for much less cash.

 

The "west" is screwed.

 

To think otherwise is sheer folly.

[Dr Gloom 22149]

Moving on from Rentongate, I think austerity itself, is having very little effect on the UK economy.

 

you haven't got a clue have you?

[Renton 22001]

Just came across this and had to laugh....,

 

"It is a minority in my view but it hacks people off and I understand why it hacks people off because they say, look, I'm working all the hours God sends, I'm working 50/60 hours a week... and I'm struggling to make ends meet and I feel the person next door isn't doing their bit."

 

 

.....,,,,

 

 

Sounds ver familiar doesn't it?

 

Guess who said it?

 

Politicians man

 

 

 

Red Ed Fucking Milliband is the correct answer.

 

All that mocking the Tories for neighbours in bed etc....

 

Unbelievable.

 

If you read it on context he is addressing people's perceptions, which is what all politicians do, to garner votes. Not that I'm under any illusions, he's an awful leader. But what I realise and you don't is so is Cameron.

[Christmas Tree 4827]

you haven't got a clue have you?

 

Have you any proof that its having a major effect on the economy?

[CleeToonFan 1]

My local MP in the paper whilst with his Old Etonian friend.' But the pair, who sit close to each other in what they describe as the "free-thinking" section of the House Of Commons, say they are united by their common beliefs and values.'

Both voted no to equal marriage

[Dr Gloom 22149]

Have you any proof that its having a major effect on the economy?

 

look at the gdp figures since the coalition's emergency budget, shortly after it took office. it's right there in black and white.

[Christmas Tree 4827]

look at the gdp figures since the coalition's emergency budget, shortly after it took office. it's right there in black and white.

 

Thats a no then

[Dr Gloom 22149]

Thats a no then

 

??? in that time, there's been two quarters of little to no growth, one quarter of flat growth and three quarters of negative growth and most economists are forecasting that we are about to go back into 'official' recession next quarter. what part of this don't you understand? austerity hampers growth. it's economics 101 numbnuts

[Christmas Tree 4827]

My one wish for today before retiring to the pub would be that the ill-informed and clueless would actually take a few minutes to understand what Austerity actually is in the UK.

 

Public spending is higher now than under Labour.

The only cuts that have been made were in future budget plans not current spending.

 

If you suddenly find yourself in a shitty financial situation then you cut back on what you had hoped to do over the next few years. You may put the new extension on hold, you may holiday in Spain instead of Cuba and you might eat rump rather than fillet steak.

[Christmas Tree 4827]

??? in that time, there's been two quarters of little to no growth, one quarter of flat growth and three quarters of negative growth and most economists are forecasting that we are about to go back into 'official' recession next quarter. what part of this don't you understand? austerity hampers growth. it's economics 101 numbnuts

 

It was a simple question that you have dodged.

 

Have you any proof that Austerity is having a major impact on our economy?

[Dr Gloom 22149]

here's a good read CT, which i'm sure you'll ignore, given you're about as informed on politics as you are on weight loss.

 

Is Austerity Self Defeating?

 

By Tejvan Pettinger on January 10, 2013 in economics

Question from the Economist. – It is easy to understand the case that European austerity is self-defeating. But it is also easy to see that one cannot run large deficits year after year without limit, and that some countries (Greece, Portugal) have exhausted the willingness of private investors to finance them.

Is Austerity self-defeating?

Austerity means efforts to reduce the budget deficit. Austerity involves higher tax and cuts in government spending. In theory, this should reduce the budget deficit. However, austerity policies also have an impact on economic growth.

1. Higher taxes reduce consumer spending
   
2. Government spending cuts also lead to lower aggregate demand, for example, public sector pay freezes reduce consumer spending. Public sector job cuts lead to higher unemployment
   
3. Loss of confidence associated with ‘austerity policies’ – encourages higher saving and less spending.
   

The impact of austerity policies will be to reduce the rate of economic growth and possibly push the economy into recession. This will increase the cyclical part of the budget deficit. Lower economic growth reduces tax revenues, higher unemployment leads to higher benefit spending.

Therefore, if you pursue austerity policies you have to expect a smaller reduction in the budget deficit because of these cyclical factors.

However, some suggest the negative impact on economic growth could be so significant that the fall in economic growth will outweigh your efforts to reduce spending. Therefore, despite increasing tax rates, and cutting spending, in some circumstances you actually see a rise in your budget deficit (as a % of GDP)

 

When Can Austerity Be Self – Defeating?

 

1. No alternative policies to boost demand.

If you pursue deflationary fiscal policy (austerity) the impact depends on:

• Monetary policy (can you cut interest rates? can you increase money supply?)
  
• Exchange Rate (can you devalue the currency to make exports cheaper?)
  
• Export led growth (can you rely on exporting goods to other countries who are growing?
  

In the 1980s, Ireland had a large budget deficit. It pursued austerity policies and was successful in reducing the budget deficit. However, in the 1980s, it could benefit from a flexible exchange rate, looser monetary policy, and strong growth in the rest of Europe. In 2000s, Ireland is pursuing austerity, but without devaluation or an independent monetary policy. Europe is also growing much slower so exports remain weak. It has been much harder to reduce the debt to GDP ratio in Ireland. Spain has seen a continued rise in debt to GDP, despite embracing austerity.

2. It depends on the type of spending cuts. If a government reduced its deficit by making people work longer for a pension, they could cut spending and possibly see an increase in the supply of labour. This type of spending cut is unlikely to cause lower economic growth. If the government cut spending by cancelling capital investment or making public sector workers redundant, this would have a much bigger adverse impact on economic growth. Job losses in particular would lead to a fall in consumer confidence and there could be a negative multiplier effect.

3. Is the economy resilient?

Paul De Grauwe, Yuemei Ji, 21 February 2013, produced a study on this theme ‘Panic driven austerity‘, and showed how panic driven austerity has led to dire economic consequences.

Source: Vox

This shows a strong correlation between greater austerity and lower real GDP. In the period 2008-12, the European economy was particularly weak. There was a balance sheet recession, with banks and the private sector trying to reduce their debt levels and reduce their spending. Therefore, the economy was very weak before the government added to the fall in domestic demand by pursuing austerity.

In other circumstances, austerity may only have caused a temporary fall in real GDP, but in the great recession of 2008-12, we have seen a prolonged fall in GDP, and therefore austerity has been more damaging than usual. For example, the negative fiscal multiplier of austerity was greater than expected.

 

4. How Do Bond Markets React?

Some countries have pursued austerity measures only to see bond yields rise – This is partly because markets are concerned over the prospects for economic growth. Rising bond yields increase interest payments and make it harder to reduce the primary deficit. However, the UK pursued austerity measures and bond yields stayed low. Rising bond yields can put more pressure on governments to reduce deficits quickly.

5. Does the private sector take the place of government sector spending?

In 2010, the Conservatives hoped cutting government spending would enable a rise in private sector investment. The argument is that government spending can ‘crowd out’ private sector spending. In normal circumstances, a reduction in government spending should enable higher private sector spending. But, in a liquidity trap and severe recession, the private sector have no appetite for investment. Therefore, cuts in government spending fail to lead to higher private sector spending. In other words, in a liquidity trap, government borrowing is offsetting the rise in private sector saving. So reducing government borrowing leads to higher saving and lower spending.

Niesr Report on Impact of Fiscal Consolidation in Europe

The think tank Niesr stated that fiscal consolidation in recession of 2012/13, will actually increase the debt to GDP burdens in Eurozone economies. Further reading

Conclusion.

In severely depressed countries, austerity can be self-defeating. In particular, if countries have no alternative ways to boost economic growth, spending cuts can fail to reduce the size of budget deficits as a % of GDP.

However, equally austerity policies can reduce budget deficits, as long as the economy has some resilience. It helps if there are alternative policies to provide some economic stimulus (e.g. exports or monetary policy). Also, without austerity policies, it could cause rising bond yields (though this depends on many other factors)

The problem is that the Eurozone meets many criteria for austerity to be self-defeating. The Eurozone:

• Has seen persistent recession in southern Europe. Unemployment rates are very high, leading to a persistent loss in output (not just a cyclical loss)
  
• There is no recourse to alternative monetary policy
  
• Bond markets have pushed up interest rates faster and higher than usual given levels of budget deficit. Therefore, governments have been ‘pushed’ into extremely severe austerity measures at the worse possible time.
  
• Austerity policies have reduced business and consumer confidence.
  

[Kid Dynamite 7170]

For all CT likes to think of himself as a cut above he ferries people about in his car doing double shifts and living in Sunderland. Unlucky

[NJS 4411]

My one wish for today before retiring to the pub would be that the ill-informed and clueless would actually take a few minutes to understand what Austerity actually is in the UK.

 

Public spending is higher now than under Labour.

The only cuts that have been made were in future budget plans not current spending.

 

If you suddenly find yourself in a shitty financial situation then you cut back on what you had hoped to do over the next few years. You may put the new extension on hold, you may holiday in Spain instead of Cuba and you might eat rump rather than fillet steak.

 

Public spending is higher because of increased need for benefits because theres no growth.

 

And before you say unemployment is down please wake up to the fact that all those shitty jobs created still cost because of tax credits and housing benefits needed because the jobs are so shitty.

[Christmas Tree 4827]

here's a good read CT, which i'm sure you'll ignore, given you're about as informed on politics as you are on weight loss.

 

Is Austerity Self Defeating?

 

By Tejvan Pettinger on January 10, 2013 in economics

Question from the Economist. – It is easy to understand the case that European austerity is self-defeating. But it is also easy to see that one cannot run large deficits year after year without limit, and that some countries (Greece, Portugal) have exhausted the willingness of private investors to finance them.

Is Austerity self-defeating?

Austerity means efforts to reduce the budget deficit. Austerity involves higher tax and cuts in government spending. In theory, this should reduce the budget deficit. However, austerity policies also have an impact on economic growth.

1. Higher taxes reduce consumer spending
   
2. Government spending cuts also lead to lower aggregate demand, for example, public sector pay freezes reduce consumer spending. Public sector job cuts lead to higher unemployment
   
3. Loss of confidence associated with ‘austerity policies’ – encourages higher saving and less spending.
   

The impact of austerity policies will be to reduce the rate of economic growth and possibly push the economy into recession. This will increase the cyclical part of the budget deficit. Lower economic growth reduces tax revenues, higher unemployment leads to higher benefit spending.

Therefore, if you pursue austerity policies you have to expect a smaller reduction in the budget deficit because of these cyclical factors.

However, some suggest the negative impact on economic growth could be so significant that the fall in economic growth will outweigh your efforts to reduce spending. Therefore, despite increasing tax rates, and cutting spending, in some circumstances you actually see a rise in your budget deficit (as a % of GDP)

 

When Can Austerity Be Self – Defeating?

 

1. No alternative policies to boost demand.

If you pursue deflationary fiscal policy (austerity) the impact depends on:

• Monetary policy (can you cut interest rates? can you increase money supply?)
  
• Exchange Rate (can you devalue the currency to make exports cheaper?)
  
• Export led growth (can you rely on exporting goods to other countries who are growing?
  

In the 1980s, Ireland had a large budget deficit. It pursued austerity policies and was successful in reducing the budget deficit. However, in the 1980s, it could benefit from a flexible exchange rate, looser monetary policy, and strong growth in the rest of Europe. In 2000s, Ireland is pursuing austerity, but without devaluation or an independent monetary policy. Europe is also growing much slower so exports remain weak. It has been much harder to reduce the debt to GDP ratio in Ireland. Spain has seen a continued rise in debt to GDP, despite embracing austerity.

2. It depends on the type of spending cuts. If a government reduced its deficit by making people work longer for a pension, they could cut spending and possibly see an increase in the supply of labour. This type of spending cut is unlikely to cause lower economic growth. If the government cut spending by cancelling capital investment or making public sector workers redundant, this would have a much bigger adverse impact on economic growth. Job losses in particular would lead to a fall in consumer confidence and there could be a negative multiplier effect.

3. Is the economy resilient?

Paul De Grauwe, Yuemei Ji, 21 February 2013, produced a study on this theme ‘Panic driven austerity‘, and showed how panic driven austerity has led to dire economic consequences.

Source: Vox

This shows a strong correlation between greater austerity and lower real GDP. In the period 2008-12, the European economy was particularly weak. There was a balance sheet recession, with banks and the private sector trying to reduce their debt levels and reduce their spending. Therefore, the economy was very weak before the government added to the fall in domestic demand by pursuing austerity.

In other circumstances, austerity may only have caused a temporary fall in real GDP, but in the great recession of 2008-12, we have seen a prolonged fall in GDP, and therefore austerity has been more damaging than usual. For example, the negative fiscal multiplier of austerity was greater than expected.

 

4. How Do Bond Markets React?

Some countries have pursued austerity measures only to see bond yields rise – This is partly because markets are concerned over the prospects for economic growth. Rising bond yields increase interest payments and make it harder to reduce the primary deficit. However, the UK pursued austerity measures and bond yields stayed low. Rising bond yields can put more pressure on governments to reduce deficits quickly.

5. Does the private sector take the place of government sector spending?

In 2010, the Conservatives hoped cutting government spending would enable a rise in private sector investment. The argument is that government spending can ‘crowd out’ private sector spending. In normal circumstances, a reduction in government spending should enable higher private sector spending. But, in a liquidity trap and severe recession, the private sector have no appetite for investment. Therefore, cuts in government spending fail to lead to higher private sector spending. In other words, in a liquidity trap, government borrowing is offsetting the rise in private sector saving. So reducing government borrowing leads to higher saving and lower spending.

Niesr Report on Impact of Fiscal Consolidation in Europe

The think tank Niesr stated that fiscal consolidation in recession of 2012/13, will actually increase the debt to GDP burdens in Eurozone economies. Further reading

Conclusion.

In severely depressed countries, austerity can be self-defeating. In particular, if countries have no alternative ways to boost economic growth, spending cuts can fail to reduce the size of budget deficits as a % of GDP.

However, equally austerity policies can reduce budget deficits, as long as the economy has some resilience. It helps if there are alternative policies to provide some economic stimulus (e.g. exports or monetary policy). Also, without austerity policies, it could cause rising bond yields (though this depends on many other factors)

The problem is that the Eurozone meets many criteria for austerity to be self-defeating. The Eurozone:

• Has seen persistent recession in southern Europe. Unemployment rates are very high, leading to a persistent loss in output (not just a cyclical loss)
  
• There is no recourse to alternative monetary policy
  
• Bond markets have pushed up interest rates faster and higher than usual given levels of budget deficit. Therefore, governments have been ‘pushed’ into extremely severe austerity measures at the worse possible time.
  
• Austerity policies have reduced business and consumer confidence.
  

 

 

So that's still a no

[Christmas Tree 4827]

For all CT likes to think of himself as a cut above he ferries people about in his car doing double shifts and living in Sunderland. Unlucky

 

The cheek of it. You're the biggest poser on the board

[Dr Gloom 22149]

So that's still a no

 

is the fact that slowing and negative growth has coincided with the coalition's austerity drive not proof enough? what more do you want?

[Dr Gloom 22149]

CT, you obviously didn't read Martin Wolf's op-ed in today's FT. you ought to, he's one of the country's most respected economists and he's rubbishing everything you're posting on the matter

 

some highlights

 

The incoming coalition embarked on a programme of austerity with the emergency Budget of June 2010. The economy, then showing signs of recovery, has since stagnated. Even the fiscal outcomes are poor. Indeed, according to the latest Green Budget, from the authoritative Institute for Fiscal Studies this fiscal year’s borrowing requirement may be bigger than last year’s.

 

Mr Cameron argues that those who think the government can borrow more “think there’s some magic money tree. Well, let me tell you a plain truth: there isn’t.” This is quite wrong. First, there is a money tree, called the Bank of England, which has created £375bn to finance its asset purchases. Second, like other solvent institutions, governments can borrow. Third, markets deem the government solvent, since they are willing to lend to it at the lowest rates in UK history. And, finally, markets are doing this because of the structural financial surpluses in the private and foreign sectors.

 

Again, Mr Cameron notes that “last month’s downgrade was the starkest possible reminder of the debt problem we face”. No, it is not, for three reasons. First, Moody’s stressed that the big problem for the UK was the sluggish economic growth in the medium term, which austerity has made worse. Second, the rating of a sovereign that cannot default on debt in its own currency means little. Third, the reason for believing long-term interest rates will rise is expectations of high inflation and so higher short-term rates. But such a shift is going to follow a recovery, which would make austerity effective and timely.

[Christmas Tree 4827]

is the fact that slowing and negative growth has coincided with the coalition's austerity drive not proof enough? what more do you want?

 

It started two years before they came to office We has a temporary upwards blip when Brown tried and failed to buy the election.

[Dr Gloom 22149]

It started two years before they came to office We has a temporary upwards blip when Brown tried and failed to buy the election.

 

so what's your take on wolf's column?

[Christmas Tree 4827]

CT, you obviously didn't read Martin Wolf's op-ed in today's FT. you ought to, he's one of the country's most respected economists and he's rubbishing everything you're posting on the matter

 

some highlights

 

You are doing lots of quoting but struggling to find any proof that shows austerity is having a major impact on the UK economy.

 

This is because it isnt. It will have some impact but that is tiny compared to the problems caused by the global slump or lack of credit etc.

[Christmas Tree 4827]

so what's your take on wolf's column?

 

Probably bollocks but I'll tell you after the pub

 

Must dash.

[Dr Gloom 22149]

Probably bollocks but I'll tell you after the pub

 

Must dash.

 

and with that, i'm passing the baton on to someone else masochistic enough to want to continue discussing this with you.

[Renton 22001]

 

 

and with that, i'm passing the baton on to someone else masochistic enough to want to continue discussing this with you.

 

I'll briefly take it. CT, what proof do you want? Is the association between austerity and negative growth presented to you not enough? What on Earth else could prove it for you?

 

This literally isn't disputed by anyone other than you, Cameron, or Gideon. It was predicted. The mechanism us well known. It is precedented. And it has happened.

[Kid Dynamite 7170]

 

 

The cheek of it. You're the biggest poser on the board

 

Public sector 4 Lyfe bitch

[TheMoog 0]

Really not sure why CT bothers, he's fighting a losing battle trying to convince anyone from the North East that anything other than 'Special' Ed and his retard squad could possibly do a better job.