Politics

[Christmas Tree 4827]

I understand your logic, CT, but the economy is very different from a family or household.

 

Take the line, "eventually come out the other side in a healthy position to take advantage when things pick up." for instance.

 

How does this healthy position come about? In order to get an economy growing again, you need to have businesses investing, people in employment, spending money. If countries around the eurozone just sit tight and wait, they'll all look at each other in 5 years time and realise that someone needs to make the first move.

 

In a household situation, there will generally always be someone who is better off than you and someone who is worse off, so sitting tight is a natural and rational reaction. At macro level though, cutting back is suicidal as it only serves to promote a downward spiral of negative growth.

 

It's not an easy concept to grasp, but you need to clearly differentiate between a household and a national economy.

 

The world is stuck in a global slump, the eurozone is struggling. Until they pick up we are stuck. They are our customers. Nothing we can do in the UK can impact those markets. Surely you accept this?

 

The only thing we can do is try and stimulate the home market but as we have no money thats not easy. Ed Balls suggestion is that we borrow gazillions to try and increase our home market UNTIL the eurozone / global markets pick up. Then he wants to pay off the debt as we will be booming.

 

He wants to gamble that we will return to the good old days of the last 20 years.

 

This is a very similar position to a household struggling through hard times. You either buckle down and try and get through or you borrow to see you through and hope you can pay it back at some point.

 

There is no guarantee that borrowing to see us over would work. That is why most sensible people dont back it.

 

As you will see I have just posted the CBI's reaction. British business doesnt believe Ed Balls, why do you?

[Christmas Tree 4827]

Again, what's the benefit of low interest rates when your intention is to not borrow?

 

We are already borrowing billions man

[ewerk 31203]

We are already borrowing billions man

 

I am well aware of that. My point to you is though, as austerity is not working and one of the advantages we have over other countries is the cheap level of finance available then does it not make some sense to avail of that advantage?

[Christmas Tree 4827]

I am well aware of that. My point to you is though, as austerity is not working and one of the advantages we have over other countries is the cheap level of finance available then does it not make some sense to avail of that advantage?

 

 

Its all their in that sentence from the cbi (Im sure you understand that sentence)

Edited March 21, 2013 by Christmas Tree

[ewerk 31203]

Its all their in that sentence from the cbi (Im sure you understand that sentence)

 

I'm asking you to explain to me in your own words.

 

 

In fact, as the most prolific poster in this thread, please explain, in your own words, what your plan for economic recovery is.

[Howmanheyman 33845]

I'm asking you to explain to me in your own words.

 

 

In fact, as the most prolific poster in this thread, please explain, in your own words, what your plan for economic recovery is.

 

Magic beans is the answer, ewerk. Get the Scroungers to plant them and dig them up to earn their keep so they can buy 50" plasmas whilst smoking their tabs and drinking Glens vodka.

[BigWalrus 0]

The world is stuck in a global slump, the eurozone is struggling. Until they pick up we are stuck. They are our customers. Nothing we can do in the UK can impact those markets. Surely you accept this?

 

No I don't accept that, in fact I don't think I've disagreed with something more in my entire life.

 

The UK and the eurozone economies are intrinsically linked. There are thousands of businesses that are based in the UK and operate in the eurozone and vice versa. We are their customers more than they are ours - we have an overall trade deficit and have done for many years. This isn't a problem, but something that must be understood. We are reliant on eurozone imports for so much of our day to day output that we can't afford to just wait for it to pick up.

 

How exactly does the eurozone just "pick up"?

 

The only thing we can do is try and stimulate the home market but as we have no money thats not easy. Ed Balls suggestion is that we borrow gazillions to try and increase our home market UNTIL the eurozone / global markets pick up. Then he wants to pay off the debt as we will be booming.

 

He wants to gamble that we will return to the good old days of the last 20 years.

 

This is a very similar position to a household struggling through hard times. You either buckle down and try and get through or you borrow to see you through and hope you can pay it back at some point.

 

There is no guarantee that borrowing to see us over would work. That is why most sensible people dont back it.

 

As you will see I have just posted the CBI's reaction. British business doesnt believe Ed Balls, why do you?

 

Where have I mentioned Ed Balls? I'm not arguing Conservatives vs Labour, I'm arguing that the economy is very different from a household. A household is a very isolated arrangement with a very specific, predictable income and a very specific, predictable set of costs. An economy is subject to a whole host of internal and external factors which range from vaguely controllable to completely uncontrollable. They're vastly, vastly different!

 

Borrowing at a household level is also very predictable. You take out a loan and pay back a set amount each month, perhaps subject to a variable interest rate. You know when it's due to be fully repaid and you know what it's secured on.

 

Borrowing at a macro level influences so many other areas of the economy, such as exchange rates (what? something the UK does could influence the eurozone??), inflation, trade deficit levels, house prices, foreign investment, pension valuations, employment levels, etc etc etc.

 

Without this basic understanding of the fundamental difference between a household and the entire UK economy, it's impossible to really take your argument seriously.

[BigWalrus 0]

CBI: The voice of business in the UK

 

" The Government must stick to its guns on its fiscal strategy. Changing course would risk damaging market credibility and could lead to higher public borrowing and interest rates".

 

That's a typically non-committal quote from the CBI. They don't say that they agree with the approach that's been taken, only that they consider it silly to drastically change it now.

 

Good business is built on stability and consistency - unpredictable government policy is the last thing we need.

[Christmas Tree 4827]

I'm asking you to explain to me in your own words.

 

 

In fact, as the most prolific poster in this thread, please explain, in your own words, what your plan for economic recovery is.

 

No, Ive played that game too often with you. I understand you understand it, move on.

 

Secondly, I think we are fucked for years and years to come. Ive said this many times, as you should know.

[Christmas Tree 4827]

No I don't accept that, in fact I don't think I've disagreed with something more in my entire life.

 

The UK and the eurozone economies are intrinsically linked. There are thousands of businesses that are based in the UK and operate in the eurozone and vice versa. We are their customers more than they are ours - we have an overall trade deficit and have done for many years. This isn't a problem, but something that must be understood. We are reliant on eurozone imports for so much of our day to day output that we can't afford to just wait for it to pick up.

 

How exactly does the eurozone just "pick up"?

 

 

 

Where have I mentioned Ed Balls? I'm not arguing Conservatives vs Labour, I'm arguing that the economy is very different from a household. A household is a very isolated arrangement with a very specific, predictable income and a very specific, predictable set of costs. An economy is subject to a whole host of internal and external factors which range from vaguely controllable to completely uncontrollable. They're vastly, vastly different!

 

Borrowing at a household level is also very predictable. You take out a loan and pay back a set amount each month, perhaps subject to a variable interest rate. You know when it's due to be fully repaid and you know what it's secured on.

 

Borrowing at a macro level influences so many other areas of the economy, such as exchange rates (what? something the UK does could influence the eurozone??), inflation, trade deficit levels, house prices, foreign investment, pension valuations, employment levels, etc etc etc.

 

Without this basic understanding of the fundamental difference between a household and the entire UK economy, it's impossible to really take your argument seriously.

 

Hey thats fine for you to disagree. Thats what politics is about. Remember though, this is what moodys said....

 

Despite considerable structural economic strengths, the UK's economic growth will remain sluggish over the next few years due to the anticipated slow growth of the global economy

 

You can disagree with them too, but they are basically saying the same thing, there is not a lot we can do about sluggish global economy.

 

Regarding the household thing I think you are getting too hung up on specifics. Its an analogy that is widely used over the years in politics and is not meant to be scientific.

 

You say you are not arguing conservative v labour. What then is your view? Should we stay with the current fiscal strategy as supported by moodys, cbi etc or follow Ed Balls loose idea of borrow and spend?

[Christmas Tree 4827]

That's a typically non-committal quote from the CBI. They don't say that they agree with the approach that's been taken, only that they consider it silly to drastically change it now.

 

Good business is built on stability and consistency - unpredictable government policy is the last thing we need.

 

So you agree we shouldnt change to a borrow and spend fiscal strategy of the sort called for my Labour.

[NJS 4411]

 

So you agree we shouldnt change to a borrow and spend fiscal strategy of the sort called for my Labour.

 

And of course by many leading economic experts, global bodies and something that has worked in the US.

[Renton 22001]

Or stick to the proven failed policy of austerity. CT predicts years more of this shit, but this a self-fulfilling prophecy. The deficit isn't even reducing and we've lost our AAA rating already. This was not inevitable, we should have a big advantage over Europe after all.

[Christmas Tree 4827]

Austerity isnt producing growth. That doesnt mean that borrowing is the answer.

 

Decent article cutting through the party politics of it here.

 

http://www.guardian.co.uk/business/2013/mar/17/cant-spend-way-out-of-crisis-but-can-cut-taxes

[Renton 22001]

Wonder if it's possible to Google our way out of recession?

[BigWalrus 0]

You say you are not arguing conservative v labour. What then is your view? Should we stay with the current fiscal strategy as supported by moodys, cbi etc or follow Ed Balls loose idea of borrow and spend?

 

Hang on - that's a big leap! Moodys haven't supported the austerity, they've just said that any growth we can manage will be limited by the slow growth globally. They haven't supported drastic cuts. The quote you have used simply demonstrates that they believe any economic growth will be limited due to global factors. Where do they suggest that the UK should stop spending and hibernate, while we wait for the rest of the world to "pick up"?

 

Equally, the CBI haven't supported such austerity. They've conceded that the government have made their choice, and in the circumstances it's safer for businesses to be able to have certainty over the future economic policy to allow them to correctly budget, forecast and justify their investment decisions. They in no uncertain terms have supported a policy of austerity.

 

Here's a household analogy for you. Imagine you come home from work and your lass has painted the living room a horrible dark purple colour. You don't like it, but you know that it'll take 6 or 7 coats of your favoured light beige colour to cover it properly. However, you can't be arsed with 6-7 coats as it's a right ball-ache. You also have other rooms in that need painting (such as the kitchen, which has a manky layer of grease all over the ceiling), so didn't want to put them on hold. So instead, you reluctantly accept it as it would be more expensive to try to correct it.

 

Your lass is the government. You are the CBI. Does that put their quote into context?

[BigWalrus 0]

My thoughts, regardless of the view of any politician (to be honest they all seem to be converging into one anyway...) is that austerity is not the way forward.

 

The traditional conservative approach is to let market forces take over and what will be will be. However, the influence that public spending and public sector money has on the private sector is massive, particularly in the north east.

 

As a specific example, I've done some work with a couple of big car dealership chains up here and they collect data on the occupations of their customers (for general trends rather than any marketing purpose). It's staggering how large a proportion of their sales are to public sector workers. Cut the number of public sector workers up here and the car dealers sell less cars, they employ less staff, they make less profit and they pay less tax. The staff that they have to let go not only don't contribute to the tax pot any more, but they need to be paid job seekers allowance.

 

It's a simple flow chart, and as soon as you go down the austerity route, it's a long row back.

 

The recession may not have been initially caused by the UK, but we can't rely on being rescued by the global economy suddenly returning to growth to pick us up. Our exports simply aren't strong enough for that to happen.

[Christmas Tree 4827]

Hang on - that's a big leap! Moodys haven't supported the austerity.

 

Moodys were very clear that they could "downgrade the UK's credit rating further in the event of 'reduced political commitment to fiscal consolidation".

 

Equally, the CBI haven't supported such austerity.

 

John Cridland, director-general of the business group, said the coalition was right to continue with its original plan for cutting Britain's deficit and should ignore chants from a string of academics and industry experts to adopt an alternative economic strategy.

2011

 

The cbi backed the cuts at the outset and have continued to do so.

 

 

I also know that when colours enter the debate, its time to take a break

[BigWalrus 0]

The CBI didn't support austerity. What they wanted was for a rebalancing of the budget. They wanted the net spend to remain consistent, but more spend to be directed towards infrastructure at the expense of other areas.

 

This isn't an all out appeal for increasing spending, but it's not a backing of austerity.

[BigWalrus 0]

For what it's worth, I don't think the CBI really know what they want either...

[Gemmill 46030]

 

I also know that when colours enter the debate, its time to take a break

 

Let the record reflect that CT will not debate with black people. Appalling.

[BigWalrus 0]

It was his colours that entered the debate. He brought the break on himself.

[Dr Gloom 22149]

the tory policy seems to be to sit on their hands, cross their fingers and hope the recovery comes sooner rather than later. we all know (CT aside) that austerity hampers growth. if they sit tight for another year and growth still hasn't picked up, they may be forced to do something if they want to be re-elected. the only issue then is cameron and osborne's political careers will be over, as they would essentially be admitting they got it wrong. though that could in turn prove to be a blessing for the tories as a party as it would pave the way for BoJo to take over.

 

the budget was deeply political, but largely ineffective when it comes to the economy. it's fiscally neutral, and a few boosts for business and sweetners for middle england like the penny off the pint don't hide the fact that economic activity and the public finances are slipping further into the mire, with the economic stagnation leading to the deficit reduction plan stalling.the obr reckons tax receipts will be weaker over the next few years than it previoulsy forecast and as a result public sector net borrowing will reamin the same this year and next. throw persistently higher-than-expected inflation into the mix and things don't look good.

 

osborne could have done more to try to boost demand. he could have increased capital spending by more, and do it to start straight away, not in a few years. the only thing that might really make any difference is the tweaks to the bank of england's remit but even then it's a long shot.

 

if things still haven't picked up by the next budget, or even by the autumn statement, you may well see another u turn from this government, or a credible leadership challenge from a london-based bufoon starting to emerge.

[Meenzer 15718]

Boris? Bring it on!

[Happy Face 29]

 

The world is stuck in a global slump, the eurozone is struggling. Until they pick up we are stuck. They are our customers. Nothing we can do in the UK can impact those markets. Surely you accept this?

 

The global economy was nowt to do with labours economic failings. But the ONLY factor in the Tories failure to recover.

 

Party political alligience over evidence disgusts me.