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Consumer morale near 2-year low in November
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Thrugelmir wrote: »Even Tony Blair admits that the rise in public spending should have been curtailed from 2005 onwards. So the recession alone is not an excuse.
There was a problem with spending too much before 2009, that is true. But, it was a very controlable and manageable problem, caused in large part by the Labour government making a political choice to spend money it really shouldn't have.
The kind of deficit we've had for the last two years is on an order of magnitude worse than that: the kind of deficit I never thought I'd see in my life time, unless we were involved in world war three.
It's the difference between someone dying with malaria and having a bad head cold.“The ideas of debtor and creditor as to what constitutes a good time never coincide.”
― P.G. Wodehouse, Love Among the Chickens0 -
Sir_Humphrey wrote: »So, not many then.
On VAT:
When a government has to pay out VAT, the VAT is paid back to the government.
Nope, government bodies (like schools) have 100% VAT recovery, so they recover 100% of vat they spend it does not go back in to government coffers.
I
But the point was just simply a mad point, and had nothing to do with what I was saying. Tax is a support for the public sector, if companies did not pay most of the public sector would not exist.
It its to tax spending, you could not recycle it if the private sector did not collect it (supply the money for the government to spend in the first place.)0 -
Also, government differs from businesses because it is not financially constrained at all by what banks lend it. Governments have the means to repay the deficit at any time it chooses. During 2009, the UK government printed every single pound it spent. For government, debt is an accounting fiction, but it is not constrained by what people choose to lend it.
So are you saying the cost of government borrowing is irrelevent?
The rates on government bonds etc are all irrelevent, we can just print and the markets will lend to us at what ever rate we like?0 -
There was a problem with spending too much before 2009, that is true. But, it was a very controlable and manageable problem, caused in large part by the Labour government making a political choice to spend money it really shouldn't have.
The kind of deficit we've had for the last two years is on an order of magnitude worse than that: the kind of deficit I never thought I'd see in my life time, unless we were involved in world war three.
It's the difference between someone dying with malaria and having a bad head cold.
A deficit in one of the biggest booms was manageable? if you are spending more than returns in a boom how is that controlable and manageable? Did they really think they had cured boom and bust?
ASAIK there were no plans in place to pay it back other than fantasy?
Fantasy being never ending growth, the credit crunch was caused by debt, the boom was fulled by debt, the govenment got overblown and debt, that was never controlable and manageable it was always going to go wrong at one point.
This sums up the UK government from 2001 on, the government were the Grasshopper, they should have been the ants.
http://www.youtube.com/watch?v=HAd0jOuQg8o0 -
A deficit in one of the biggest booms was manageable?
Certainly manageable, yes. There's no doubt about that. I'm afraid that anyone who says otherwise IS a frother. The concept that you are going to run surpluses in booms frankly belongs to a different monetary system.
The problem prior to the Lehmen's crash was spending growth was above trend GDP growth. But you didn't need any severe measures to solve that, just return spending growth to 2005 trajectory. You could have done that with few problems.
The decision to increase public spending at a fast rate was a political decision. Sooner or later, it had to change, but it could have been easily changed by any subsequent government.
Even the conservatives promised to keep the same spending commitments as Labour prior to the collapse of Lehmen brothers.
They saw no danger in it.
Neither did any serious economist.
Prior to the Lehmen boom, most economists were worried about the balance of trade, shockingly low savings rate, and various global imbalances.So are you saying the cost of government borrowing is irrelevent?
The rates on government bonds etc are all irrelevent, we can just print and the markets will lend to us at what ever rate we like?
The rates on government bonds are not irrelevant, but since we can print as much as we want, the government is not constrained by finance and can spend whether markets choose to lend or not. If you chose to print more money than the market will lend, there will be inflation.
It comes down to political choices.“The ideas of debtor and creditor as to what constitutes a good time never coincide.”
― P.G. Wodehouse, Love Among the Chickens0 -
Certainly manageable, yes. There's no doubt about that. I'm afraid that anyone who says otherwise IS a frother. The concept that you are going to run surpluses in booms frankly belongs to a different monetary system.
Why would I be a frother does it not make sense running a surplace in a boom (or a smaller deficit).
It is quiet obvious it gives you more scope for movement in a bust.
Yes the western world may run on debt but id it not fairly obvious we have been caught out this time.
So call me a frother if you will but here is a list of revenues and deficits
http://en.wikipedia.org/wiki/Government_budget_by_country
It is fairly obvious those that are running the highest deficits and a % of revenue are the ones that are in the deepest poop. The ones running a surplace are generaly not on the danger list (except iceland as they are forced to run a surplace to pay back debt)
How was it manageable you never said? on the proviso we would never have a bust? If that is the case you have a bit of a cheek calling me a frother.
Funny how even Tony Blair said we should have cut back from 2005 but you wont accept that.0 -
Why would I be a frother does it not make sense running a surplace in a boom (or a smaller deficit).
It is quiet obvious it gives you more scope for movement in a bust.
Yes the western world may run on debt but id it not fairly obvious we have been caught out this time.
So call me a frother if you will but here is a list of revenues and deficits
http://en.wikipedia.org/wiki/Government_budget_by_country
It is fairly obvious those that are running the highest deficits and a % of revenue are the ones that are in the deepest poop. The ones running a surplace are generaly not on the danger list (except iceland as they are forced to run a surplace to pay back debt)
How was it manageable you never said? on the proviso we would never have a bust? If that is the case you have a bit of a cheek calling me a frother.
Funny how even Tony Blair said we should have cut back from 2005 but you wont accept that.
It was entirely manageable whether or not we had a normal recession. As I said, what matters is that public spending growth is kept below or at the trend GDP over the long term. That is one of the two main things which determine whether a deficit is sustainable.
As for Tony Blair, I didn't listen to him much or agree with what he said much when he was in office, so I don't see why you think I should listen to him now? He couldn't find his !!!! with an ordinance survey map.“The ideas of debtor and creditor as to what constitutes a good time never coincide.”
― P.G. Wodehouse, Love Among the Chickens0
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