German 1Q GDP Posts Sharpest Fall Since 1970

Generali

Ok, you guys think I'm wrong. We'll see.

My money is on the current wave of Governments borrowing huge sums of money causing some pretty severe problems down the track. As it is, the UK Government spent GBP30,000,000,000 on interest payments last year. It's perfectly plausible that in a few years that'll be more like GBP60,000,000,000 or even more.

I was wrong about the house price bubble and potential problems with the banks on this board (or its earlier incarnations) until I was right of course. Perhaps I lucked out.

Generali

kennyboy66 wrote: »

I thought that Keynes was writing his theories in the context of just being through a global depression.

Cyclical recessions are inevitable and probably desirable to shake out the dross.
I'm not sure if a depression is that desirable.

I think had we let banks fail, a depression would have been close to a certainty.

If so, would you just let it run its course or try and spend your way out ?

Seems to me that once a depression sets in, that it is fiendishly difficult to get out of it.

It depends on the actions of other Governments. As Governments across the world are printing money and borrowing big to spend then there really is no reason for the UK Government to follow suit.

If you want an export led recovery then run a pretty much balanced budget and let the cash pumped in to other economies be used to buy your products. The world is so interconnected that you can just let everyone else cripple themselves in the future - by suffering a little pain now you can clean up in future. And hey, the UK has a welfare state so it's not like people are going to starve.

StevieJ

chewmylegoff wrote: »

I suppose the IMF's predictions that the UK economy will be the only major economy that shrinks in 2010 falls into that category of evidence does it.

No, not at all I have always been itsy bitsy cynical in the past, but now whenever I see a forecast I ask myself 'what is in it for them' ?

System

Rochdale_Pioneers wrote: »

Hard evidence is what counts, not forecasts. And the evidence is clear. We're not worst off. Our unemployment is relatively low - both in context of past UK recessions and currently vs Europe. Our economy isn't shrinking as quickly as our competitors. The pound hasn't crashed as predicted. We're still in far less debt than the few economies bigger than ourselves. These are the facts. I know they disagree with the political narrative created by mamny posters, but that doesn't change reality.

Kind of explains why Gordon Brown just sat chuckling to himself when Daniel Hannan pimped himself out on youtube with his misinformed rant.

StevieJ

Joeskeppi wrote: »

Kind of explains why Gordon Brown just sat chuckling to himself when Daniel Hannan pimped himself out on youtube with his misinformed rant.

That Hannan guy what a prat :rotfl:

Degenerate

Generali wrote: »

It depends on the actions of other Governments. As Governments across the world are printing money and borrowing big to spend then there really is no reason for the UK Government to follow suit.

If you want an export led recovery then run a pretty much balanced budget and let the cash pumped in to other economies be used to buy your products.

If everyone else is doing it and you're not, then your currency will soon become way too strong and your exports goods hopelessly uncompetitive. You won't get the benefit of their deficit spending, in fact your exports to those countries will plummet as they buy their own and each other's more affordable goods.

kennyboy66_2

Generali wrote: »

It depends on the actions of other Governments. As Governments across the world are printing money and borrowing big to spend then there really is no reason for the UK Government to follow suit.

If you want an export led recovery then run a pretty much balanced budget and let the cash pumped in to other economies be used to buy your products. The world is so interconnected that you can just let everyone else cripple themselves in the future - by suffering a little pain now you can clean up in future. And hey, the UK has a welfare state so it's not like people are going to starve.

Would this be a sort of monetarist "beggar thy neighbour" policy ?

If so, I'm in.

kennyboy66_2

Generali wrote: »

Ok, you guys think I'm wrong. We'll see.

My money is on the current wave of Governments borrowing huge sums of money causing some pretty severe problems down the track. As it is, the UK Government spent GBP30,000,000,000 on interest payments last year. It's perfectly plausible that in a few years that'll be more like GBP60,000,000,000 or even more.

I was wrong about the house price bubble and potential problems with the banks on this board (or its earlier incarnations) until I was right of course. Perhaps I lucked out.

I think what we are doing is just about the least worse course of action.

The £60 billion you quote is probably similar in % terms to what the Government spent during most of the 1980's.

Generali

kennyboy66 wrote: »

Would this be a sort of monetarist "beggar thy neighbour" policy ?

If so, I'm in.

I guess so only in this case the neighbour beggars himself!

When I studied economics I had a very interesting professor for some of my classes. She maintained that one reason that Germany's economy had been successful since the 1960s was that the Bundesbank did pretty much the opposite from every other Central bank in times of crisis. When others inflated, they deflated and let German companies take advantage of temporarily increased demand overseas. When other countries increased rates they realised that was doing their deflationary work for them.

I don't entirely agree but it's an interesting theory.

StevieJ

Generali wrote: »

I guess so only in this case the neighbour beggars himself!

When I studied economics I had a very interesting professor for some of my classes. She maintained that one reason that Germany's economy had been successful since the 1960s was that the Bundesbank did pretty much the opposite from every other Central bank in times of crisis. When others inflated, they deflated and let German companies take advantage of temporarily increased demand overseas. When other countries increased rates they realised that was doing their deflationary work for them.

I don't entirely agree but it's an interesting theory.

Germany the parasite of Europe interesting concept.