Darling will spend his way out of recession

baby_boomer

Interspersed with a few:

"taking the difficult decisions"

How come "taking difficult decisions" for Gordon always seems to involve spending MY money while HE tries to take the credit?

baby_boomer

Maybe they're not going to spend much more.

FT - Maybe invoking Keynesianism is just a smoke screen to justify rewriting Brown's fiscal rules in order to accommodate what they've already spent over the odds

Alastair Darling is going to call time on the Brown rulebook and Prudence in a speech on Wednesday.

Generali

baby_boomer wrote: »

Maybe they're not going to spend much more.

FT - Maybe invoking Keynesianism is just a smoke screen to justify rewriting Brown's fiscal rules in order to accommodate what they've already spent over the odds

Alastair Darling is going to call time on the Brown rulebook and Prudence in a speech on Wednesday.

the chancellor will make it clear he plans to ditch fiscal rules that are perceived as too rigid – including Mr Brown’s “golden rule” only to borrow to invest over the economic cycle – and which economists say have been already been bent.

This has been completely obvious for the past 3 years.

1. Set up a 'Golden Rule'.
2. Break it and change the measurement to look like you've kept it.
3. As soon as times get tough you decide to chuck it all away.

As an aside, did you know that the Chancellor of the Exchequor can still set interest rates, that he can overule the MPC if he wants to?

Politicians should be banned from borrowing outside of times of total war. It's the only language they understand. If they want to engage in a little Keynsian demand management then let them save for it.

Sir_Humphrey

Generali wrote: »

Politicians should be banned from borrowing outside of times of total war. It's the only language they understand. If they want to engage in a little Keynsian demand management then let them save for it.

Politicians make the laws and it is up to them.

Elected politicians can decide to run the economy as they see fit and be judged on their performance at the ballot box. It is something called democracy.

Not trying to rescue an economy from a very bad slump would be completely irresponsible.

Perhaps companies should be banned from borrowing too, such a law would be equally crazy.

More of the spending of the last five years should have come from increased taxation, which would have helped to quell the boom. It is funny how some people (not specifically anyone here) seem to think tax cuts will stimulate the economy, but ignore the role of raising taxes to tame a boom.

baby_boomer

Does Gordon need to keep something in reserve in case the banks need more help :eek:

Generali

Sir_Humphrey wrote: »

Politicians make the laws and it is up to them.

Elected politicians can decide to run the economy as they see fit and be judged on their performance at the ballot box. It is something called democracy.

Not trying to rescue an economy from a very bad slump would be completely irresponsible.

Perhaps companies should be banned from borrowing too, such a law would be equally crazy.

More of the spending of the last five years should have come from increased taxation, which would have helped to quell the boom. It is funny how some people (not specifically anyone here) seem to think tax cuts will stimulate the economy, but ignore the role of raising taxes to tame a boom.

The problem is that when politicians borrow they sell a very seductive lie which is that somehow you can consume and nobody pays. This is encouraged by the use of phrases like Government money, the 'free' NHS and so on.

If I or a company borrows then we have to repay those funds. When a politician borrows he expects the next lot to repay (as setting taxes at a higher level than spending is unpopular it means a politician has to accept a lower level of popularity).

I admit I was being a little OTT for effect but the fact is that there has been no good reason for the Government to have borrowed a penny since 1997 yet the national debt in £ note terms has soared (before the whole banking mess).

baby_boomer wrote: »

Does Gordon need to keep something in reserve in case the banks need more help :eek:

Well the pension industry is going to be the next one needing sorting out next. The bill for that will be in excess of £1,000,000,000,000 (public and private sectors).

baby_boomer

Yes. The Royal Mail workers seemed to think that 177m profit was somehow excessive.

Given that RM has a 5bn+ pension deficit (28 years worth of all those profits) , there's a financial education gap that needs closing PDQ.

Generali

baby_boomer wrote: »

Yes. The Royal Mail workers seemed to think that 177m profit was somehow excessive.

Given that RM has a 5bn+ pension deficit (28 years worth of all those profits) , there's a financial education gap that needs closing PDQ.

It's about 50 years too late. That the civil service pension scheme wasn't funded was fatal to pensions in this country. Changing the rules about private pension schemes in the 80s didn't help nor did companies using early retirement as a way of pushing through large scale job losses without provoking the unions. Finally, the belief that you can work for 40 years and then live on a pension for 40 years has been fostered by companies, Governments and trade unions and swallowed by a public that didn't want to see that it was a crazy idea.

Sir_Humphrey

Generali wrote: »

The problem is that when politicians borrow they sell a very seductive lie which is that somehow you can consume and nobody pays. This is encouraged by the use of phrases like Government money, the 'free' NHS and so on.

If I or a company borrows then we have to repay those funds. When a politician borrows he expects the next lot to repay (as setting taxes at a higher level than spending is unpopular it means a politician has to accept a lower level of popularity).

It could be argued that a state can roll over the debts much like a company. I am certainly not in favour of huge deficits for their own sakes, and I would hope that once the current recession/slump is over then the deficit would be reduced. Whether it is reduced by tax rises or public spending cuts is ultimately a political choice.

The NHS is described as "free at the point of use". Of course, this is not entirely the case, but compared to the costs of most treatments, the cost of prescription charges are very low. When it was founded, the publicity made it clear that the NHS was a form of mutual insurance and was not charity.

I agree that there has been a lot of dishonesty, particularly from New Labour about public spending. This is the idea that you can have American style taxes, and European style public services. I can see why they had to pretend they were compatible from a political POV. Ultimately, there is a political choice between the degree of government directed spending on public services, or personal spending on consumables.

I personally favour the former as it tends to favour the poorer half of society, and gives me peace of mind that if I have a heart attack or cancer I do not have to worry about health insurance as well as everything else.

There is a trade off between the two, and where that trade-off is made is a political choice.

Generali

Sir_Humphrey wrote: »

It could be argued that a state can roll over the debts much like a company. I am certainly not in favour of huge deficits for their own sakes, and I would hope that once the current recession/slump is over then the deficit would be reduced. Whether it is reduced by tax rises or public spending cuts is ultimately a political choice.

The NHS is described as "free at the point of use". Of course, this is not entirely the case, but compared to the costs of most treatments, the cost of prescription charges are very low. When it was founded, the publicity made it clear that the NHS was a form of mutual insurance and was not charity.

I agree that there has been a lot of dishonesty, particularly from New Labour about public spending. This is the idea that you can have American style taxes, and European style public services. I can see why they had to pretend they were compatible from a political POV. Ultimately, there is a political choice between the degree of government directed spending on public services, or personal spending on consumables.

I personally favour the former as it tends to favour the poorer half of society, and gives me peace of mind that if I have a heart attack or cancer I do not have to worry about health insurance as well as everything else.

There is a trade off between the two, and where that trade-off is made is a political choice.

My belief is that a bigger state hurts the poor more than the rich as it pays to be poor. Why bother going out and working hard if the couple next door earn the same or more for sitting on their a r s e s watching TV all day?

I certainly agree there is a political choice to be made between private and public spending. The choice that bothers me is chosing to spend now and have my kids pay for it.