Postpone some of the cuts?

LauraW10

tomterm8 wrote: »

Yes. Your post is purely ideological. Who said anything about 'living beyond your means indefinitely'. Only you.

Before the government cuts started to take effect, the budget deficit had started to shrink. Now, even before we have seen 95% of the cuts, the budget deficit is growing again. Which is what I predicted would happen.

The debate is about how to cut the deficit, and how to 'stop living beyond our means'.

Putting us back into recession with badly thought out economic policy based on slogans and not thought is not a great way to do that.

Great Post.

Generali

Sir_Humphrey wrote: »

Go away, find out how bond markets work and then come back here with some knowledge of what you are talking about.

You are talking nonsense, nonsense which is currently wrecking the economic recovery and blighting people's lives.

That's how maths works.

If you spend more than you earn each month then your debts will build. If you increase your rate of adding to debt faster than you are increasing your income then you will spend an increasing proportion of your income on debt servicing. Ultimately, if you continue, your ability to service the debt ceases as the interest payments outstrip your income.

You don't need to be a bond trader to work that out!

LauraW10

Generali wrote: »

That's how maths works.

If you spend more than you earn each month then your debts will build. If you increase your rate of adding to debt faster than you are increasing your income then you will spend an increasing proportion of your income on debt servicing. Ultimately, if you continue, your ability to service the debt ceases as the interest payments outstrip your income.

You don't need to be a bond trader to work that out!

That's just one side of it though isn't it?

If you reduce your income (because your tax receipts fall) the effect is the same - many economists believe that the resulting tax losses create a bigger deficit in the long run. So trying to reduce your spending when you are in a dip creates a worse situation.

You don't have to be a bond trader to work that out! Hell the guy in the post room could work it out

Generali

tomterm8 wrote: »

Yes. Your post is purely ideological. Who said anything about 'living beyond your means indefinitely'. Only you.

Before the government cuts started to take effect, the budget deficit had started to shrink. Now, even before we have seen 95% of the cuts, the budget deficit is growing again. Which is what I predicted would happen.

The debate is about how to cut the deficit, and how to 'stop living beyond our means'.

Putting us back into recession with badly thought out economic policy based on slogans and not thought is not a great way to do that.

The Labour Government had got to a position where there was a structural deficit of the order of 5% of GDP. That means that over an economic cycle (if you believe in them), the Government would, on average, be spending an extra 5% of GDP each year than it was taxing or in absolute terms, for each (roughly) £112 spent, £100 would be raised in taxes.

That is a structural problem, nothing to do with greedy bankers or international recessions. The Labour Government as a matter of policy put spending such that debt would rise faster than ability to service that debt.

Generali

LauraW10 wrote: »

That's just one side of it though isn't it?

If you reduce your income (because your tax receipts fall) the effect is the same - many economists believe that the resulting tax losses create a bigger deficit in the long run. So trying to reduce your spending when you are in a dip creates a worse situation.

You don't have to be a bond trader to work that out! Hell the guy in the post room could work it out

It depends why your tax reciepts fall. If they fall because you decide not to employ someone in the public sector who produces little or no output and so it is cheaper to pay him £60/week to sit at home than £400/wk to go to work then it's worth giving up the tax receipt.

LauraW10

Generali wrote: »

The Labour Government had got to a position where there was a structural deficit of the order of 5% of GDP. That means that over an economic cycle (if you believe in them), the Government would, on average, be spending an extra 5% of GDP each year than it was taxing or in absolute terms, for each (roughly) £112 spent, £100 would be raised in taxes.

That is a structural problem, nothing to do with greedy bankers or international recessions. The Labour Government as a matter of policy put spending such that debt would rise faster than ability to service that debt.

I would just like to point out that GB only ever borrowed to invest in the UKs future and not to finance their everyday spending. This was intended to create growth.

Do you not believe in investing in the future ?

LauraW10

Generali wrote: »

It depends why your tax reciepts fall. If they fall because you decide not to employ someone in the public sector who produces little or no output and so it is cheaper to pay him £60/week to sit at home than £400/wk to go to work then it's worth giving up the tax receipt.

If in sacking the people who you see as being unproductive you create a collapse of confidence- that stops people spending - that leads to the loss of the jobs of many many productive people, then many would see the £340 saving as a very false economy.

tomterm8

Generali wrote: »

The Labour Government had got to a position where there was a structural deficit of the order of 5% of GDP. That means that over an economic cycle (if you believe in them), the Government would, on average, be spending an extra 5% of GDP each year than it was taxing or in absolute terms, for each (roughly) £112 spent, £100 would be raised in taxes.

That is a structural problem, nothing to do with greedy bankers or international recessions. The Labour Government as a matter of policy put spending such that debt would rise faster than ability to service that debt.

So if that is the case, why did the conservative party go along with it until the the banking crises hit? Why don't I remember anyone going on and on about the deficit in 2007?

It's not rocket science, Generali, if I had to produce a plan for a government to cause a really serious recession, there are really three obvious options:

1. Massively increase interest rates or
2. Massively increase tax and reduce spending at the same time or
3. Print loads of money and cause massive inflation

Certainly the Labour government was trying its best to use option 3 to cripple the economy.

Now we have the tories causing a planned recession using option 2.

Surely, a more sensible approach is to close the deficit more slowly, and actually look a little bit to the income side of the ledger? Maybe start to have some plans to remove some barriers to starting up a new business? Maybe not introducing plans to mean a small business could actually hire people without having to worry about the fact they could just work for a month, and then spring a six month maternity holiday? Maybe consider whether the working height regulations are reasonable, whether we really need a risk assessment every time someone uses a ladder?

I haven't seen the Conservatives introduce a single change that makes it easier to actually employ people.

Generali

LauraW10 wrote: »

I would just like to point out that GB only ever borrowed to invest in the UKs future and not to finance their everyday spending. This was intended to create growth. ?

There's one born every minute.

Generali

tomterm8 wrote:

Surely, a more sensible approach is to close the deficit more slowly, and actually look a little bit to the income side of the ledger? Maybe start to have some plans to remove some barriers to starting up a new business? Maybe not introducing plans to mean a small business could actually hire people without having to worry about the fact they could just work for a month, and then spring a six month maternity holiday? Maybe consider whether the working height regulations are reasonable, whether we really need a risk assessment every time someone uses a ladder?

I haven't seen the Conservatives introduce a single change that makes it easier to actually employ people.

if the Government spends money and less output results than if it was spent privately then that is destructive to the economy. There is no point in employing people to dig holes, Keynes was wrong to say that it is IMO.

I certainly agree that the best way to stimulate employment is to make it easy and cheap to employ them, especially for smaller companies where time is as big a problem as money.