Politics

[ChezGiven 0]

Britain is not bust. It is rich and could get even richer – here’s how

 

When the government published its spending review in 2010, the promise was of an early return to healthy growth. The forecast then was that the UK would grow by about 3.5 per cent over 2011 and the first half of 2012. Since then, the economy has shrunk. The latest estimates from the Office for National Statistics show that the UK economy contracted by 0.7 per cent in the second quarter of 2012 – a third consecutive fall – while the year-on-year drop in GDP of 0.8 per cent was the steepest since the end of 2009.

 

This continued gloom fits a convenient narrative for analysts on all sides. It vindicates the arguments of those who, like me in these pages a year ago, argued that the government’s misguided macroeconomic policies would choke off recovery. But it also supplies ammunition to those who want yet more spending cuts beyond those already planned. They can continue to point to high deficits – higher than were forecast before the government’s plan was announced – as justification. There may be no economic logic to this position but rhetorically it is a powerful point. Despite the present gloom, we are not doomed to slow growth or indefinite fiscal austerity. There are three overlapping varieties of economic pessimism but there is little evidence to support any of them.

 

Glass half-empty

First, there are the “supply-side pessimists”, who think that, even in the short term, the economy isn’t capable of generating much growth. The Office for Budget Responsibility (OBR) claims that although output is about 4 per cent below its peak, we haven’t got much room to grow. It thinks that spare capacity in the economy is only about 2.5 per cent. Looking a little deeper, this is very difficult to believe. The OBR’s estimates imply that firms have no spare capacity at all, given the levels of employment. That is, that everyone in work is pretty much fully occupied. Even the International Monetary Fund finds this implausibly gloomy.

 

Second, there are the “permanent austerians”, who argue that the deficit is so large and the fiscal forecasts so dismal that we will have to keep on cutting, not just until 2015, as per the original plan, but until 2020, as the Prime Minister has suggested. Yet recent history suggests thata proper recovery would quickly render these forecasts obsolete. In 1993-94, the budget deficit was only slightly lower than it was last year. In sharp contrast to the current administration, the then government adopted the sensible policy of not trying to cut the deficit until recovery was established. The result was strong growth and rapidly falling deficits. In four years, the deficit had been almost eliminated and only three years after that we had the largest surplus in modern times.

 

Both these arguments are used by those who want to stick with current economic policy despite the dismal results; they argue that changing course wouldn’t make things much better. This is a self-fulfilling prophecy. If we set fiscal and monetary policy on the basis that we are doomed to low growth, that is exactly what we will get. Moreover, as the long-term unemployed drift away from the labour market and new firms find it difficult to start or expand, long-term growth really will be damaged. But the underlying health of the UK economy is much better than the OBR forecasts suggest. Over the past two decades – up to and including the recession – GDP per capita grew faster in the UK than in all our major comparator economies, as the chart below shows.

 

Nor was this an unsustainable boom. The chart shows GDP per capita, so the growth wasn’t driven by immigration pushing up the population and GDP without raising overall prosperity. There is no obvious bubble in 2006 and 2007 but consistent good performance throughout the period. While a small part of that reflects the growth of the financial sector, some (but not all) of it illusory, the vast majority was because of improvements in the UK labour market, a more skilled workforce and a more competitive economy. None of those has gone away. In the short term, “growth pessi­mism” is self-fulfilling; sensible macroecono­mic policy, both here and in the eurozone, could make things much better quite quickly.

 

 

Long-term government borrowing is as cheap as it has been in living memory. We have unemployed workers and plenty of spare capacity. The UK is suffering from creaking infrastructure and a chronic lack of housing supply. So there is ample scope for investment and growth. The third and more substantive argument is made by those who point out that there is a serious question as to the sustainability of present policies in the long term. The OBR’s long-run fiscal sustainability report points to a substantial gap between projected tax reven­ues and public spending. As the books have to balance in the long run, something must give; policy must change.

 

Reasons to be cheerful

As a matter of arithmetic, this is correct – but to translate this into “Britain is bust” is absurd. The truth is the opposite. Britain is rich and will get richer. The same OBR report says that income per head in 2060 will be substantially more than double what it is today. As countries grow richer, people want more and better health and education and spend less of their increased income on necessities such as food. That is both inevitable and desirable.

 

It so happens that the British want good-quality health and education, largely provided free at the point of use by the public sector; decent state pensions and social care, and for old people to be able to leave their houses to their children, not to have to sell them; and they don’t want to pay the taxes necessary to fund all this. This combination doesn’t add up and poses a significant political challenge; but that doesn’t make us any poorer, let alone bust. These are the problems of success in a rich, ageing, developed economy. There is plenty to worry about. We are still stuck in the longest period of stagnation in recorded economic history, thanks to damaging and unnecessary policy failures, both here and globally. But things could and should be better, if policymakers would only act. Over the longer term, there are – from a purely economic perspective, at least – reasons to be cheerful.

 

http://www.newstatesman.com/politics/politics/2012/07/britain-not-bust-it-rich-and-could-get-even-richer-heres-how

[Park Life 71]

Stop or slow the austerity measures until we are back on growth is an obvious starter. Massive public investment in R&D and infrastructure is another. You say we can't be like the Germans. Why not?

 

This is one think I can't fathom about Tory thinking.

[Park Life 71]

One final graph for you CT as i leave work in 10 minutes....

 

Link

 

The average Joe is bound to feel like the country is doing worse, because despite all the growth around them, the inflation, average house prices going through the roof, petrol etc. over the last 14 years the median wage has barely moved. Effectively the vast majority are a lot worse off. It's the only thing not to have grown with the economy....with dergulation, deunionisation, increased low skilled immigration etc. it only gets worse, that's what a government need to rectify.

 

This has been the big trick keeping wages static for nye on two decades in the UK and 3 in the states. While everything else goes up.

[NJS 4365]

I need to prove that coal mining, ship building, electronics, clothing industries have gone abroad. If thats the case then you have just become Wolfy.

 

HF hasnt demonstrated the opposite. None of the above show up in his graphs because they've gone!!!!!

 

Its like discounting the existence of Dinosaurs because they havent shown up in any recent countryside surveys.

 

It's you that's blind.

 

I regret the demise of the "old" industries - especially the way it was done - but the point is that they've been replaced.

 

My best mate worked at Westoe from when he was 16 until it closed. He's now a supervisor at Nissan - guess which he prefers?

 

And if you try and make the point that any profit goes to Japan I don't really care as any "Britsh" profit is now shipped abroad anyway.

[ewerk 30221]

So the possible future leader of the free world, on a brief visit to London, has managed to piss everyone off by casting doubt on the organisation of the Olympics, calling Miliband, 'Mr. Leader', and telling everyone that he has met the head of MI6 (an apparent faux pas).

 

This is what happens when you have 12 wives.

[Gemmill 44263]

He could be even more fun than Dubya.

[Gemmill 44263]

Cameron and Boris made themselves look like twats with their responses, so its not all bad.

 

Says it all about Miliband that he couldn't even remember his name though.

Edited July 27, 2012 by Gemmill

[Gemmill 44263]

Hook, line and sinker: How the European Bankers robbed a continent blottr.com/contributor/ol… via @Blottr

 

With the minimum of fuss and very little attention in the media, an unelected central banker just performed a spectacular manoeuvre allowing himself to quite literally raid the earnings and savings of 317 million people in Europe with no further recourse than demanding that by doing so, he will save the Euro as a currency.

 

A little background perhaps.

 

Mario Draghi, an ex World Bank and Goldman Sachs Managing Director was appointed by the Council of the European Union (did you ever vote for any of these?) to the second most powerful banking position in the world – head of the European Central Bank. Yesterday, he quietly announced that he would do “whatever it takes” to save the Glorious Euro and in turn, the careers and pensions of a raft of corrupt European Politicians and Bankers. He isn’t joking either. This is a man who can issue bonds, demand funding, control interest rates and lean on the democratically elected leaders of every country in the Eurozone to do as HE says.

 

Moreover, he can access the tax regimes of any Eurozone state, issue or deny credit. If the Germans or the Finns decide that enough is enough and Greece should receive no further handouts from the hard pressed taxpayers, he can simply roll his Trojan horse through the lot of them and issue credit to the Greeks via the European Central Bank bonds – without any recourse to democracy or European law. He can, in effect, help himself to whatever financial resources he feels he needs and there is no one on the planet that can stop him.

 

A massive rise in European stocks yesterday showed that Corporate Europe likes the idea of a population of 300 million who will not be allowed to go bust, no matter how badly or corruptly they run their economies. Big business loves the idea of being able to rely on a central bank that will never run out of other people’s money. Hedge funds and speculators have been shown that no matter how big, corrupt or outright incompetent, no European bank will be allowed to fail, the printing of worthless money can continue and in the background, the taxpayer will always be frogmarched to cashpoints all over Europe to pay for it.

 

Earlier this week, I warned of the creation of a perfect “banking State” whereby an unelected banker could force elected politicians and their electorates to dance for his pleasure or kneel before him in servitude. Guess what? It’s just arrived. Put away your party politics, your banners, your candidates and your political campaigns, the European Central Bank has achieved what 200 years of war could not. Total dominance over the wealth of the people. The European Central Bank has nothing more to do with stability or principles or solidarity of a monetary union designed to serve the people, it is merely a brutal instrument to redistribute your wealth as and when it sees fit and there is nothing you or I can do about it.

 

Dear Eurozone. You may think you live in a democracy, but every penny you will ever own now belongs to Mario Draghi. Don't say you weren't warned.

[Park Life 71]

Hook, line and sinker: How the European Bankers robbed a continent blottr.com/contributor/ol… via @Blottr

 

With the minimum of fuss and very little attention in the media, an unelected central banker just performed a spectacular manoeuvre allowing himself to quite literally raid the earnings and savings of 317 million people in Europe with no further recourse than demanding that by doing so, he will save the Euro as a currency.

 

A little background perhaps.

 

Mario Draghi, an ex World Bank and Goldman Sachs Managing Director was appointed by the Council of the European Union (did you ever vote for any of these?) to the second most powerful banking position in the world – head of the European Central Bank. Yesterday, he quietly announced that he would do "whatever it takes" to save the Glorious Euro and in turn, the careers and pensions of a raft of corrupt European Politicians and Bankers. He isn't joking either. This is a man who can issue bonds, demand funding, control interest rates and lean on the democratically elected leaders of every country in the Eurozone to do as HE says.

 

Moreover, he can access the tax regimes of any Eurozone state, issue or deny credit. If the Germans or the Finns decide that enough is enough and Greece should receive no further handouts from the hard pressed taxpayers, he can simply roll his Trojan horse through the lot of them and issue credit to the Greeks via the European Central Bank bonds – without any recourse to democracy or European law. He can, in effect, help himself to whatever financial resources he feels he needs and there is no one on the planet that can stop him.

 

A massive rise in European stocks yesterday showed that Corporate Europe likes the idea of a population of 300 million who will not be allowed to go bust, no matter how badly or corruptly they run their economies. Big business loves the idea of being able to rely on a central bank that will never run out of other people's money. Hedge funds and speculators have been shown that no matter how big, corrupt or outright incompetent, no European bank will be allowed to fail, the printing of worthless money can continue and in the background, the taxpayer will always be frogmarched to cashpoints all over Europe to pay for it.

 

Earlier this week, I warned of the creation of a perfect "banking State" whereby an unelected banker could force elected politicians and their electorates to dance for his pleasure or kneel before him in servitude. Guess what? It's just arrived. Put away your party politics, your banners, your candidates and your political campaigns, the European Central Bank has achieved what 200 years of war could not. Total dominance over the wealth of the people. The European Central Bank has nothing more to do with stability or principles or solidarity of a monetary union designed to serve the people, it is merely a brutal instrument to redistribute your wealth as and when it sees fit and there is nothing you or I can do about it.

 

Dear Eurozone. You may think you live in a democracy, but every penny you will ever own now belongs to Mario Draghi. Don't say you weren't warned.

 

The core differences in thinking:

 

 

http://snbchf.com/su...side-economics/

 

Alarm bells always go off when I see the words 'ex-Goldman Sachs'.

Edited July 27, 2012 by Park Life

[PaddockLad 17065]

Am I right in assuming that if the ego maniacs of Wall Street and Canary Wharf choose to kill the Euro, they just can?.....no one elected them either, but people did vote for Gideon and he'd rather sell his own granny than attempt to bring those fuckers to heel.

[ewerk 30221]

Am I right in assuming that if the ego maniacs of Wall Street and Canary Wharf choose to kill the Euro, they just can?

 

If they all got together and decided to then they probably could. However, it's certainly not in their interest to do so.

[Happy Face 29]

I need to prove that coal mining, ship building, electronics, clothing industries have gone abroad. If thats the case then you have just become Wolfy.

 

HF hasnt demonstrated the opposite. None of the above show up in his graphs because they've gone!!!!!

 

Its like discounting the existence of Dinosaurs because they havent shown up in any recent countryside surveys.

 

The funny thing is that what you're arguing is like saying without the dinosaurs being involved our ecosystem cannot thrive.

 

Double

[ChezGiven 0]

Soros forced the pound out of the ERM on Black Wednesday.

[PaddockLad 17065]

Soros forced the pound out of the ERM on Black Wednesday.

 

Thats the crack like, that was down to one man alone. I think some monumental cunt could do it for shits and giggles.

[Tooj 17]

Aidan Burley MP

@AidanBurleyMP

Conservative Member of Parliament for Cannock Chase

Westminster/ Cannock Chase http://www.aidanburleymp.org

 

35m Aidan Burley MP ‏@AidanBurleyMP

Thank God the athletes have arrived! Now we can move on from leftie multi-cultural crap. Bring back red arrows, Shakespeare and the Stones!

 

55m Aidan Burley MP ‏@AidanBurleyMP

The most leftie opening ceremony I have ever seen - more than Beijing, the capital of a communist state! Welfare tribute next?

[Christmas Tree 4679]

 

Good on him. (not that I watched so don't know if he's bang on or not).

[Renton 21231]

I missed the first 30 mins or so. But after that the NHS was celebrated (lefty crap!?) as was modern music in GB which included the Stones. But yeah, he's a conservative, so every impartial guy can see he's bang on. FFS!

[ewerk 30221]

They did focus on the very few non-whites quite a bit. I'm guessing he's been on the red wine tonight, LTB style.

[Christmas Tree 4679]

UK Economy: Osborne Welcomes AAA Rating

 

 

The verdict from Standard & Poor's ratings agency showed the "world has confidence" in the coalition's economic policies, the Chancellor said.

 

"As Britain welcomes the world to our country for the Olympic Games, this is a reminder that despite the economic problems we face, the world has confidence that we are dealing with them.

 

"The deficit has fallen by a quarter; inflation has fallen by half; employment is rising, with British businesses creating over 800,000 new jobs; and the economy is rebalancing, with Britain now exporting more to the rest of the world than Europe.

 

"And as S&P themselves say, what would damage Britain's creditworthiness would be relaxing our resolve to deal with our debts. We won't do that."

 

The news is a boost to Mr Osborne after weak GDP figures revealed on Wednesday drew heavy criticism of his performance and the Government's austerity measures.

 

S&P said its outlook for the UK's coveted rating was stable and predicted the economy would pick up in the coming months.

 

"We project that despite recent weakness, the UK economy should begin to recover in the second half of 2012 and steadily strengthen, and we expect economic policy to continue focusing on closing the fiscal gap," the agency said in a statement.

 

"In our view, monetary flexibility remains a key credit strength owing to the British pound sterling's role as a global reserve currency."

 

But it warned: "We could lower the ratings in particular if the pace and extent of fiscal consolidation slows beyond what we currently expect."

[PaddockLad 17065]

http://www.independent.co.uk/news/uk/politics/imf-in-budget-warning-to-chancellor-george-osborne-7959724.html

 

The IMF criticised Gideons policies last month...they have a lot more credibility for me than the self appointed monitors of financial risk who didnt think there was anything wrong with giving those receiving Welfare in the US mortgages...

[Renton 21231]

Oh well. The debt is growing and the UK's economy has actually shrunk under the coalition. But as long as the bond markets are happy, that's ok.

 

Does anyone know why this bunch of twunts have any credibility considering their role in the sub prime fiasco that started this? Chez, anyone?

Edited July 28, 2012 by Renton

[LoveTheBobby 1]

Mench stepping down. 'family reasons'

 

T'ra .

[ewerk 30221]

Who's she been shagging then?

[LoveTheBobby 1]

Might be back on the gear .

 

Her husband manages Metallica !?

[PaddockLad 17065]

So she's done two years in the commons....had anyone heard of her before that?....thought not.

 

David Cameron: "Am sure she'll be rememebered fondly by all her constitiuents as a self regarding,bat-eared tory cunt bag"...