Public finances: The chickens coming home to roost

Rochdale_Pioneers

Sorry but I don't recognise the Osborne grasp of economics that is being discussed. There seems to be a division amongst economists and finance ministers about whether or not fiscal stimuli are needed.

On one hand you have every western government and all the major financial bodies (IMF, OECD, EU etc etc - including a chappie from the IOD on the PM programme demanding QE on a large scale).

On the other hand you have Gideon. If he is so good at economics, how come he is a lone voice arguing for not pumping money into the economy?

I'll tell you why. Its because the iceberg of Tory neo-liberal economic dogma has been sunk by the whopping great iceberg that is this depression. They believe in (and argue for):

1. Complete deregulation of banking - which has been proven to be a disaster
2. Large cuts in public spending - at a time when every government is spending oceans of cash
3. A rolling back of the state - as banks everywhere are nationalised and public works makes a comeback

Whilst I am entirely comfortable for people to slag off Brown (as I have said repeatedly the accusations are almost all true), you have to look at the alternative. As it stands the Tories want to take Britain off in a direction utterly contrary to the rest of Europe, America, Japan, Australia etc. That would mean keeping us out of the international framework which will be created this year - which as Phillip Hammond argued at last year's conference would leave a deregulated city of London in a position to "clean up".

To me they sound as if their solutions are created for a world that no longer exists. So whilst they clearly are doing very well in opposition you have to ask how they will fare - and Gids specifically - once their policies come under scrutiny. Having to explain why they are right and the rest of the world is wrong will be a tough sell.

A._Badger

I hate to intrude on Rochdale Pioneers' singing from the Labour party songsheet but, as a matter of factual accuracy, it was not deregulation of the financial sector that failed, but bungled and mishandled regulation - whether at the hands of Barney Frank in the USA, or Brown (vis the FSA), in the UK.

As an aside, I also don't find the 'consensus of economists' argument at all convincing, either, and I'm surprised to see it being seriously advanced.

The majority view helped get us into this mess and I don't see it showing us a reilable way out of it. Ideas need to stand on their merits, not the wisdom of crowds.

Wookster

Rochdale_Pioneers wrote: »

1. Complete deregulation of banking - which has been proven to be a disaster

So lets get this right, the Tories argue for complete deregulation but they aren't in power so errr Labour deregulates the banking sector and now you blame the Tories? (Nevermind the fact that the banking sector is extremely heavily regulated, by an organisation that was sleeping in the back while a thief raided the shop).

Rochdale_Pioneers wrote: »

2. Large cuts in public spending - at a time when every government is spending oceans of cash

The problem you are failing to see is that if Gordon Brown had been more prudent in the good times he would be able to get away with such a large deficit for a longer period than now. The point is he wasn't and we are now running the second largest annual deficit behind the US.

Rochdale_Pioneers wrote: »

3. A rolling back of the state - as banks everywhere are nationalised and public works makes a comeback

What do you think the role of the state should be? Who spends money more efficiently? The state? Or the private sector? And who creates wealth more effectively, the state or private sector?

Rochdale_Pioneers wrote: »

Having to explain why they are right and the rest of the world is wrong will be a tough sell.

The answer to that would be above...

Rochdale_Pioneers

A._Badger wrote: »

I hate to intrude on Rochdale Pioneers' singing from the Labour party songsheet but, as a matter of factual accuracy, it was not deregulation of the financial sector that failed, but bungled and mishandled regulation - whether at the hands of Barney Frank in the USA, or Brown (vis the FSA), in the UK..

Gotcha. So if the bungled regulators had been completely removed and a deregulated financial market left to do its thing, none of this would have happened.

An interesting hypothesis with one major flaw. Its rampant boy cow brown stuff. As I said, I am happy with abuse of Brown because he quite patently was in charge. But thats the UK. "Failed regulation" you say - so have the regulatory systems failed in the same way in every developed country then? Because last time I checked banks around the world have managed to entangle themselves in a web of debt which is killing them.

According to you its failed regulation. Everywhere. At the same time.

Or perhaps its not that. Whilst the regulatory setups in those countries quite patently failed, they were all swept away by something truly international. Perhaps its that which is actually responsible - and that points the finger straight back at the banks. Encouraged by light-touch regulation they allowed greed to drive them on into insane gambles that created this money pyramid which we have seen implode. Imagine what size that pyramid would have been with even less regulation?

"Singing from the Labour hymn-sheet"? Dear God man that is funny. I can see how Brown can be blamed for a UK mess. But for a global mess? What has crashed our economy has bankrupted the Irish and the Icelandics. Has forced America's trillion dollar bailouts. And the 2% of GDP pumped into EU budgets across the Eurozone. And the injection of cash in Australia. And Japan. And China's economy to stop with no buyer for its exported goods. Thats all Brown is it?

So either Brown is fabulously unlucky to have cocked up independently here at the same time as the same has happened everywhere else, or he has contributed to a global !!!!-up which has swept us all away. And you'd like LESS regulation......?

Rochdale_Pioneers

Wookster wrote: »

The answer to that would be above...

OK then, so Gideon AND the Wookster vs the combined economic brains of the rest of the world, I stand corrected.

Wookster

Rochdale_Pioneers wrote: »

OK then, so Gideon AND the Wookster vs the combined economic brains of the rest of the world, I stand corrected.

So just more sarcastic comments or are you going to answer any of my questions above?

Rochdale_Pioneers

Wookster wrote: »

So just more sarcastic comments or are you going to answer any of my questions above?

You haven't asked any questions. My point 1 was looking at Tory policies going forward and you framed it as blaming them for Labour's mess. Reread what I wrote then answer this - how given their endless critique of Brown's lax regulation can they be right to advocate a policy of less regulation?

And for my points 2 and 3 you have made your usual statements. And you're ignoring the point about this being actual real life policy on the ground in countries across the developed world. Regardless of whether or not this is a good thing the Tories will have to explain why they are right and everyone else is wrong. Won't be an easy argument to explain why the governments of America, Japan, Germany, France etc etc actually aren't as intelligent as Gideon.

A._Badger

Rochdale Pioneers: "Gotcha. So if the bungled regulators had been completely removed and a deregulated financial market left to do its thing, none of this would have happened."

Sorry, but I don't know. And neither do you.

What we do know, however, is that UK regulation failed. Huff and puff all you like about it having failed elsewhere, but that doesn't address the issue of its absolute failure in the UK.

What we also know is that the Democrats in the USA pumped Fanny Mae and Freddie Mac to write mortgage business their customers couldn't support and that Bliar and 'no more boom and bust' Brown used a credit boom here to hose money at their favourite causes - hopeless schools that cannot educate and filthy hospitals that benefit managers and staff more than patients.

Would a fully deregulated market have fared better? Who knows? Perhaps if the banks had been forced to live or die by the sword they might have behaved more responsibly?

Meanwhile, you may take comfort from the fact that other economies have suffered but I do not. Many warned about the dangers of the UK's inflationary bubble and bottomless credit pot but it didn't suit Labour's voodoo economics to control it. In fact, Brown fanned the flames.

Either way, we wind-up back where we have been so many times before. With a ruined economy, a bloated public sector and the only apparent alternative, a deeply uninspiring Conservative party.

Labour craps out again. Who would have guessed?

wigglebeena

ad9898 wrote: »

What's grim about this is January is normally a good time for the government coffers, typical of a Labour government, everytime they get power it always ends in disaster,.:rolleyes:

I would amend this to:


government, everytime they get power it always ends in disaster,

Not making any excuses for the !!!!!!s, like. But anyone who wants to be a politician shouldn't be allowed, as they say...

wigglebeena

Bliar and 'no more boom and bust' Brown used a credit boom here to hose money at their favourite causes - hopeless schools that cannot educate and filthy hospitals that benefit managers and staff more than patients.

this is true, but what's the answer? sorry to go OT.

I assume it wasn't the original intent when they got started. Could someone not be appointed, incentivized on the basis of every bit of paperwork, bumf and bureaucracy they could eliminate while maintaining criteria to ensure minimum standards but maximal teaching/medical discretion and freedom?Seriously, everybody 'knows' that teachers now spend more time on paperwork than on teaching. Is that actually true? If so, then something is really wrong.