10 Policy Errors that lead to the Great Recession Pt2

purch

http://www.bondvigilantes.com/2011/09/23/if-this-is-part-2-of-the-great-recession-what-were-the-10-recent-policy-errors-that-got-us-here/

Interesting article by Jim Leaviss of M&G Investments (Bond Vigilantes)

1. The ECB hiking interest rates twice this year
2. The Tea Party and the idiots on both sides of politics in the US
3. The continuing Osborne UK austerity programme
4. Not banning shorting via sovereign CDS
5. Over-regulation of the banking sector. :eek:
6. Not bailing out Greece/not letting Greece go bust quickly.
7. Doing the wrong kind of Quantitative Easing.
8. China’s pegging of the RMB to the US dollar.
9. Pension funds didn’t de-risk in the good times.
10. Not enough shock and awe. Policy was always too incremental.


Some of those are pretty obvious, some arguable. The main theme seems to be, not doing enough quickly enough.

The catastrophe that was the Credit Crunch was never going to be solved, or be over in a couple of years.

The problems, and potential problems have been known about for a few years, but too little is being done, and too late.

HAMISH_MCTAVISH

purch wrote: »

The main theme seems to be, not doing enough quickly enough. .

Absolutely.

It's the same problem that was faced in the original depression of the 30's. Timid, feeble, incremental responses will not solve the problem.

Time to go large and get it fixed once and for all.... Fire up the helicopters and start dropping cash into the REAL economy instead of the banks.

The_White_Horse

and cut benefits and public sector pay.

OptionARMAGEDDON

QE always was about recap and not increasing liquidity, despite what they said. It was to prevent default and not to stimulate. This is why I am dead against QE2, if it is done outside of the banking sector. It will directly lead to inflation, as opposed to filling in a black hole created by overleverage and reckless lending.

The only area I would indulge slight stimulus in would be to gain MUCH lower rates of interest in lending to small businesses, perhaps generating a government backed loans scheme. Many small businesses are stalling on cashflow issues and not a lack of trade.

smamst

Only one reason for the mess, Liar loans.

Will take another few years to clear up the mess and house prices to drop 50%, but it will happen, and everyone who bought a house who couldn't really afford to do so will get burned. Tough !!!!!!.

Butterfly_Brain

The_White_Horse wrote: »

and cut benefits and public sector pay.

Isn't that always your answer :mad: Most public sector employees earn under £20,000 pa and some less than £15,000 pa and I take it that you have never been unfortunate enough to have to need state benefits :mad:

Thrugelmir

HAMISH_MCTAVISH wrote: »

It's the same problem that was faced in the original depression of the 30's. Timid, feeble, incremental responses will not solve the problem.

There is no fix it all solution. Simply because there will no overall agreement between all parties concerned. Issues will need to be tackled piece by piece. As each response to a problem will create an issue somewhere else. More likely we will see a return to a more protectionist world where ones own interests will come first.

Thrugelmir

Butterfly_Brain wrote: »

Isn't that always your answer :mad: Most public sector employees earn under £20,000 pa and some less than £15,000 pa and I take it that you have never been unfortunate enough to have to need state benefits :mad:

There's more to the public sector than just wage costs. The cost of the whole structure is unaffordable to the UK economy.

The UK economy is increasingly becoming low\medium wage. As globalisation of wages impacts.

shortchanged_2

HAMISH_MCTAVISH wrote: »

Absolutely.


Time to go large and get it fixed once and for all.... Fire up the helicopters and start dropping cash into the REAL economy instead of the banks.

That's one sure fire way to create hyper inflation.

Degenerate

OptionARMAGEDDON wrote: »

QE always was about recap and not increasing liquidity, despite what they said.

QE didn't recapitalise anything. Do you actually understand how it works? (Free hint: they didn't just give the new cash away.)

Wookster

HAMISH_MCTAVISH wrote: »

Time to go large and get it fixed once and for all.... Fire up the helicopters and start dropping cash into the REAL economy instead of the banks.

I think you've revealed more about yourself in this post then any other post.

You think that free money is the answer to our problems. Rack up the debt, then get free money to make it all right after.

All so that house prices can go up again.

You aught to move to Zimbabwe where your sort of economics have been tried and tested.