Madmen in Authority

ollyshaw

LauraW10 wrote: »

We are not in this position because of "spend, spend, spend" we are in this position because we bailed out the banks.

So which year did we spend all that money on bailing out the banks? How much is our deficit* this year? The bank bail out exacerbated our problems, but there is a massive structural deficit as well.

I do agree with you in some respects though. I think all parties were dishonest about our debt problem. It should have been a fair election about economic plans. I would have voted to take the pain and sort the problem. However I am not sure the mandate is there for the coalition. Canada is being held up as an example, however the Canadians begged for the problems to be addressed making the cuts popular when they came. I don't think it will be the same this time.

*This year's overspend alone.

Entertainer

Presumably LauraW was in support of the Labour proposal to "cut later"?? You do realise that the difference in the coalition cuts is £6 billion for one year?- Labour was going to take this amount out of the economy next year anyway by increasing NICs. £6 billion is 0.8% of GDP. 0.8% of GDP for one year only does not constitute the difference between the economy recovering nicely and a "double dip recession/ death spiral/ whatever piece of brainless hyperbole David-I wanted to cut interest rates in 2005 which would have created an even bigger boom-Blanchflower" comes out with.

As is usually the case from these political animals, it is all dancing on the head of a pin. The real issue is the £60 billion of cuts to come over the next 5 years which would have happened whoever was in power.

LauraW10

Spending cuts: I hope Cameron and Osborne know what they are doing

The government's proposed cure for the ailing British economy could be a bit like applying leeches to 18th century patients: worse than the disease

Like all sensible people, I hope that David Cameron and George Osborne know what they are doing when they set out to chill our collective spine as they do in all the newspapers this morning about the scale of the coming cuts to public expenditure.It was a warm-up for the PM's big "everyone's life is going to change" speech today.
But like many sensible people I have my doubts about the wisdom of this carefully choreographed exercise ahead of the chancellor's 22 June budget. If they do what they say – I am still hoping that they don't meant it – the cure could be a bit like applying leeches to 18th century patients: worse than the disease.

Bear in mind the following facts as you soak up the masochism. The UK economy is currently operating at 10% below its pre-crisis trend. The British government can borrow at real interest rates below 1%. The ratio of debt to GDP was 68% by the end of 2009-10 against 73% in Germany, 77% in France and an average of 87% over the last century or so.
Cheer up. British debt, mostly funded by British lenders who are saving madly – as in so much, unlike Greece – also has a much longer maturity, 13 years on average: no panic. British savers can finance British borrowing, and until the private sector recovers the state sector had better keep on spending if we are to avoid renewed recession.
If the new government raises taxes, cuts spending and – just for luck – tightens monetary policy too via higher interest rates and does so too quickly, we are all going to feel the pain all right. And soothing words from Nick Clegg in yesterday's Observer – soft cop to Dave's tough cop – will not save us.

http://www.guardian.co.uk/politics/blog/2010/jun/07/spending-cuts-cameron-osborne

LauraW10

Entertainer wrote: »

Presumably LauraW was in support of the Labour proposal to "cut later"?? You do realise that the difference in the coalition cuts is £6 billion for one year?- Labour was going to take this amount out of the economy next year anyway by increasing NICs. £6 billion is 0.6% of GDP. 0.6% of GDP for one year only does not constitute the difference between the economy recovering nicely and a "double dip recession/ death spiral/ whatever piece of brainless hyperbole David-I wanted to cut interest rates in 2005 which would have created an even bigger boom-Blanchflower" comes out with.

As is usually the case from these political animals, it is all dancing on the head of a pin. The real issue is the £60 billion of cuts to come over the next 5 years which would have happened whoever was in power.

I'm worried about the negative rhetoric which I believe is really damaging to consumer confidence and overseas investor confidence. I'm also worried that we are going to see massive cuts this autumn. I agree £6bn is a drop in the ocean and that doesn't concern me.

mbga9pgf

LauraW10 wrote: »

You know - we can argue all night about whether the UK had excessive debt or not prior to the financial crisis- it certainly was less than Japan, the USA, Germany and France.

No it wasnt.

If you add personal and state debt, we are in a worse position in GDP terms than Japan. Today.

Entertainer

LauraW10 wrote: »

http://www.guardian.co.uk/politics/blog/2010/jun/07/spending-cuts-cameron-osborne

That was Michael White. Michael White is a political commentator he is not an economics commentator.

tomstickland

It's like a stuck record....cutting....double dip....we should be "investing"* instead...blah blah

*"investing" meaning spending loads of borrowed money.

I'm really pleased that the coalition government are getting on with sorting things out.

LauraW10

Entertainer wrote: »

That was Michael White. Michael White is a political commentator he is not an economics commentator.

I know - I use it as example of how the Coalition rhetoric is being perceived. As I said earlier - given how this news is being covered if you work in the public sector would you have the confidence to buy a house, a car, go on holiday, a new pair of shoes. This sort of rhetoric is so damaging. The government should be "biggng up" Britain not making out we are a basket case.

tomstickland

I'm very happy for them to be facing up to the reality of the situation. We've had more than 10 years of "bigging up" things.

LauraW10

mbga9pgf wrote: »

No it wasnt.

If you add personal and state debt, we are in a worse position in GDP terms than Japan. Today.

I think your graph is telling me that the UK government borrowed a lot less than other governments, though I take yor point about debt in general;)