Ed Balls... Jesus wept

Wookster

In order to actually find a solution to our current economic woes you need to really understand the problem.

Ed Balls, Ed Milliband and the vast majority of the rest of the Labour party just simply do not understand what actually caused the 2008 credit crunch and therefore will never ever be able to actually resolve any of the deep economic problems the UK is suffering from, instead they will only be able to apply plasters that actually leave the wound to turn gangrenous.

It is a good thing they aren't in power.

RUN_RABBIT_RUN

what makes it all so lamentable in the case of ed balls is that he was actually an ft writer for 4 years in the early 90s and then an unelected economic adviser to the labour treasury for 10 years before finally becoming legitimate through the ballot box in 2005.

which makes his recent statements even more jaw-droppingly moronic

chewmylegoff

Thrugelmir wrote: »

The UK needs to cut imports not increase them. Around 3 million people work in the retail sector compared to 1 million in manufacturing. The imbalance needs to worked through. Much in the same way as Private\Public sector. The economy needs rebalancing. Which may take a decade to achieve.

aye. if they were proposing tax cuts which would encourage inwards investment then at least that would be more sensible, although i would be sceptical as to whether it would really do much to alleviate the current mess, as it's difficult to see where the investment would come from.

CLAPTON

Graham_Devon wrote: »

Were talking about a £5 saving on a white good, such as a £200 fridge. Not even £5 actually if the 2.5% cut labour propose was introduced. Thats if its passed on. I didn't see any change at all in any white good or anything sold by the likes of PC world, Comet etc when VAT was reduced, or increased. Prices stayed at rounded numbers, and the same rounded numbers.

It's not going to create spending. In either case, we'd probably not even notice.

Simply doubling the VAT rate overnight is a bit different. If labour were suggesting removing VAT altogether, then yes, I would agree, that would stimulate spending. But they are not. They are talking about saving the average family up to £40 a year on VAT rated goods, if it's passed on.

Worth remembering that even labour themselves exempted stuff like fuel from the VAT reduction in order to keep revenue up.

there are two effects of decreasing VAT

a. people may rush out and buy more VATed goods (this is the one that the press always comment on and has been mentioned with distain on this board)

and/or
b. people don't changed their buying habits for VATed goods as such BUT now have a little extra money left which they may spend on other things.

From an aggravate demand point of view of the whole economy the idea is that as people now have a little extra to spend they will do so and hence raise overall demand and increase jobs.

Masomnia

But people seem to be prioritizing paying down debt, and saving, rather then spending.

The_White_Horse

no need to borrow anything. Just cut tax (so people have more money to spend) and cut spending to make up for it.

apparantly if you work for the civil service, you can claim for new shoes after 6 year wear and tear. cut that out for a start. and then sack 30,000 of them and cancel their pensions. that will see us right.

StevieJ

Generali wrote: »

Say's Law states that supply creates its own demand.

Increasing public borrowing will just make the problem of debt rationing worse.

A classic example of that principle would be the M60 and motorways in general, they are built to relieve congestion and all that happens is more traffic is attracted and more congestion

Ilya_Ilyich

Graham_Devon wrote: »

But the credit card interest is variable. Upon borrowing more, you may find the lender jacks up the interest as you are now a higher risk.

If that effects your credit rating, and you need to find another source of credit, you could find yourself in a tricky position.

Credit agencies simply wouldn't be amused by your plan, and that would increase the costs of our debts.

Hello Greece.

This is only taking one side of the issue into account though. Yes, with increased borrowing there's the risk of higher credit cost in future that'd make debt harder to repay. But reduced spending increases the risk of reducing growth, which would also make debt harder to repay -- if we cut debt by 3% but in the process lost 4% of GDP we would be in a worse position than when we started. It's obviously a balancing act, but I think there's too much of a tendency on this board to go with the blanket 'debt is always bad, therefore anything that increases it is always bad and anything that decreases it is always good' approach rather than considering each proposal on its merits.

StevieJ

Masomnia wrote: »

But people seem to be prioritizing paying down debt, and saving, rather then spending.

Yes the old Keynesian conumdrum re virtue and vice and the paradox of thrift

ILW

Ilya_Ilyich wrote: »

This is only taking one side of the issue into account though. Yes, with increased borrowing there's the risk of higher credit cost in future that'd make debt harder to repay. But reduced spending increases the risk of reducing growth, which would also make debt harder to repay -- if we cut debt by 3% but in the process lost 4% of GDP we would be in a worse position than when we started. It's obviously a balancing act, but I think there's too much of a tendency on this board to go with the blanket 'debt is always bad, therefore anything that increases it is always bad and anything that decreases it is always good' approach rather than considering each proposal on its merits.

I agree to a point, but government "investment" seldom seems to show a return ( particularly under the last government, who just seemed to increase spending).