Madmen in Authority

StevieJ

Kohoutek wrote: »

What's your choice? Labour's was the same as the Conservatives, except slightly delayed.

Exactly, that is the choice and exactly the point Krugman was making.

LauraW10

Kohoutek wrote: »

What's your choice? Labour's was the same as the Conservatives, except slightly delayed.

It's all about timing isn't it? Even Nouriel Roubini says cuts should be made in the medium term.

If governments implement austerity measures too soon they risk snuffing out demand and recovery, but delays could provoke a catastrophe with high interest burdens and inflation."You're damned if you save and you're damned if you don't," he said.
Roubini said it was "possible to square this circle" if governments committed to a credible medium-term plan to restore their budgets.

5/6/2010 http://www.cnbc.com/id/37531998



And the cuts - they should be when the economists think it is right....not some phantom not-even-really-threatening force


The thing that's so concerning imho about the coalition's performance so far is the negative rhetoric. It's gotta be damaging confidence and confidence is key to consumer spending in general and the housing market in particular...

kabayiri

LauraW10 wrote: »

My problem is that we shouldn't just believe the rubbish that the coalition tell us - there are choices.

What choice do you have?
We have elected the current administration to do it's bidding.

LauraW10

kabayiri wrote: »

What choice do you have?

I don't have to "believe" what the government tells me - I have to live with it, that's true, and plan for the effects that their decisions have on my life but I don't have to believe that they are doing the right thing.

Kohoutek

LauraW10 wrote: »

No they are not. To quote Paul Krugman back at you

This is what the Tories want - not what the markets want - don't be fooled.

I agree that there is less of a need of immediate austerity in the UK, because we have financed our debt long term and we can print our own currency.

But Krugman is referring to the whole G20 in that article. The main countries that are starting 'austerity' immediately are the Eurozone countries that don't control their own currencies. So they have three options - austerity, get into more debt, or default. 'Restructuring' debt, i.e. defaulting is very common in developing countries. It means that creditors take the loss for bad debts and big deficits, rather than being socialised through austerity.

Paul Krugman seems to thin that left-leaning governments like the Greek government have voluntarily chosen to socialise their losses, to bring the country to brink of social chaos and depression. I think the more likely reason is that they have no choice in the matter, or believe that they have no choice.

Thrugelmir

LauraW10 wrote: »

The thing that's so concerning imho about the coalition's performance so far is the negative rhetoric. It's gotta be damaging confidence and confidence is key to consumer spending in general and the housing market in particular...

Better to be truthful than not.

As no party pre the election had the nerve to stand up and be honest.

Kohoutek

StevieJ wrote: »

Exactly, that is the choice and exactly the point Krugman was making.

But it will ultimately be immaterial if the economy/growth is not significantly improved in 2011 or whenever Labour wanted to start cuts. This current period of uncertainty which has caused the renewable fright about government deficits seems to be based the observation that things aren't getting better.

LauraW10

Thrugelmir wrote: »

Better to be truthful than not.

As no party pre the election had the nerve to stand up and be honest.

Well I would rather the coalition were honest tbh. I think what's really frustrating me is that the coalition are making out that they have no choice. They DO have a choice. They could could cut later rather than sooner.

However, I have to say they don't actually seem to be doing anything just talking negatively at the mo, and imho that is very damaging.

Thrugelmir

Kohoutek wrote: »

But it will ultimately be immaterial if the economy/growth is not significantly improved in 2011 or whenever Labour wanted to start cuts. This current period of uncertainty which has caused the renewable fright about government deficits seems to be based the observation that things aren't getting better.

The Eurozone's growth prospects have deteriorated markedly since the March budget. Without an export market how's the UK economy going to balance itself.

The falling exchange rate seems to be being used to improve selling margins rather any material increase in volume of goods sold in the smaller Company sector.

LauraW10

Kohoutek wrote: »

But it will ultimately be immaterial if the economy/growth is not significantly improved in 2011 or whenever Labour wanted to start cuts. This current period of uncertainty which has caused the renewable fright about government deficits seems to be based the observation that things aren't getting better.

What if the coalition decide to cut big in the Autumn. Isn't that too soon?

And what if all this "headline news" talk of cuts just stops people spending money and buying houses now. What will have been achieved? The coalition will have crushed growth in the 2nd Qtr before they have even taken the axe to anything?