Labour: Borrow more now, Spend more now, Cut more later

Wookster

The problem is the last Labour government said that they wouldn't over borrow. Then they did, at the first sign of hardship (2001 slow down).

Now they are saying borrow more, again, at the first sign of hardship.

Is it any wander people don't trust them?

Wookster

Extracts from an article:

Yet after nearly two years in the saddle, the excuse of past Labour excesses starts to wear a little thin, however toxic the legacy the party left behind. It’s easy enough to blame the last lot for the mess we’re in, but it’s the Government’s job to get us out of it. So far, there has been lamentably little sign of progress.

Yet after nearly two years in the saddle, the excuse of past Labour excesses starts to wear a little thin, however toxic the legacy the party left behind. It’s easy enough to blame the last lot for the mess we’re in, but it’s the Government’s job to get us out of it.

Incredible though it might seem for someone as tarnished by his association with Gordon Brown as the shadow chancellor, Mr Balls is starting to gain an audience.

The all-too-depressing reality of this downturn is that there are no quick fixes

The all-too-depressing reality of this downturn is that there are no quick fixes

Such a combination of increased investment and decreased current spending promises a virtuous circle of growth and job creation – without in any way undermining deficit reduction. For the moment, the Government lacks the courage and imagination for such strategies. If there are any positives to be had from the economic tsunami sweeping in from the eurozone, it might at least help galvanise the necessary change in approach.

Full article here: http://www.telegraph.co.uk/news/politics/georgeosborne/9226293/George-Osborne-can-stop-the-rot-but-only-by-spending-as-he-slashes.html

And a good read it is too.

chewmylegoff

Labour's so called plan for growth is just an accounting entry to window dress the problem:

Dr: GDP
Cr: Deficit

Not sure that avoiding a recession by borrowing money so you can spend it and claim that the knock on increase in GDP is a good thing.

Loughton_Monkey

We have the 'wrong type of recession' for Labour's old Keynsian policies to work. All very well if the recession were caused by something 'one-off' like the cost of a major war......

But this time, the recession was basically caused by a borrow, borrow, borrow mentality at both personal and government level. Made worse by the 'extra' cash being vapourised into foreign goods, the inefficient 'public sector', and such huge increases in benefits that the lower end of the labour market can now only be filled by foreigners.....

Add to that 'paper money' created magically by the bankers, half of which has been spent, and the other half vapourised away.

To 'invest' [i.e. spend] even more government money after this is just about the craziest thing I can imagine. Answers can only lie around (a) unwinding the incredible and costly public sector/benefits excesses, and (b) doing a deal with bankers about future lending.

Sounds possibly draconian, but it should go like this (with the bankers):

1. For personal unsecured lending, impose such strict leverage and taxation penalties on all lenders so as (effectively) to put an almost total block on any more personal credit.

2. Leave secured personal lending broadly alone, although possibly encourage some slight relaxation in terms to encourage house building.

3. Apply future tax breaks to banks [and/or government to supply an element of guarantee/underwriting] to business lending, with special emphasis on sectors that create wealth [e.g. agriculture, mining, manufacturing, science/research/technology....] rather than on sectors that merely re-distribute wealth [e.g. retailers, service sector.......

pqrdef

Graham_Devon wrote: »

I.e. Start a new school building programme to create jobs. Bring forward current plans to create jobs etc.

But if not now, when?

It's not the government's job to mimic the private sector, overspending when the private sector is booming, and cutting when the private sector is cutting. That's only making things worse.

The government's job is to use its muscle to do the opposite, so as to minimise the booms and busts.

When the next boom comes - just supposing - that won't be the time to borrow like crazy and go on a huge school building programme. We won't need the jobs then (more likely we'll need immigrants to do them). That's the time for the government to take some heat out of the economy, run a budget surplus, pay off debt, and get the country into shape to face the next downturn.

This is what Blair/Brown/Balls totally screwed up pre-2007. They were running and planning an ever-increasing deficit at the wrong point in the cycle. That wasn't the time for a school-building programme. This is, and there isn't going to be a better time.

How to pay? That's hard, and hard is something most people haven't yet faced up to. Looking round, I don't see austerity, but extravagance is still conspicuous. Income differentials are getting wider, not narrower. Too many people still have too much money.

We need to get control of private as well as public spending. Print ration books. Remove from sale the stuff that nobody needs to buy. Get to a point where nobody will mind 10% on income tax because there won't be anything else to spend the money on.

If we carry on as we are, more painful measures will be needed in the end anyway.

homelessskilledworker

Graham_Devon wrote: »

Labour bloke on TV suggested the answer to the current situation is to raise spending today, bring forward infrastructure and projects and create projects today.

I.e. Start a new school building programme to create jobs. Bring forward current plans to create jobs etc.

The borrowing required for this, will be offset by the tax take on the extra jobs (apparently).

The downfall of course, was put bluntly by another economist, who simply said "what happens after that then".

Well at that point, we'll apparently be able to cut deeper, as the economy will be back on track and we will have created growth. You can then cut, and also pay back the extra borrowing caused by the extra spending today.

So, my question is....is this credible? I don't personally think it is. But do others? As obviously labour think it's perfectly credible.

My problem is exactly what was stated...once you have bought forward all the spending, what happens after it's spent? We simply hit 2007 all over again, but this time with no future infrastructure (as it's all completed) and higher debts.

Thoughts? Is it really credible, as it's all over the TV today.

That was the same plan they had when we were having Gordon Browns economic miracle, seems like it is ALWAYS a good time to load up on debt with Labour

chucky

Wookster wrote: »

Out on day release eh chucky?

Seeing as you're the only enlightened one why enlighten the rest of us.

It's quite simple, they look after who who they need to look after and who hey've always looked after.

Labour - public sector and unions not so much now though.
Conservatives - Friends in big business while pretending to help other selected groups.
Lib Dems - Anyone who will vote for them.

Now that I've enlightened you and you decided to try to get personal, why don't you come out of the closet and let us know how tough it's been being one of life's misfortunes and failures.

JasonLVC

Graham_Devon wrote: »

I.e. Start a new school building programme to create jobs. Bring forward current plans to create jobs etc.

The borrowing required for this, will be offset by the tax take on the extra jobs (apparently).

It is no more credible than the current idea that the thousands of redundant public sector employees will be suddenly re-employed within the private sector and spending money on stuff as a result.....so both require a large leap of faith I think.

That's not to say the current Plan A isn't viable, just that time and global economics are at play. The EU is limping along with the markets still jittery, they'll have a stroke if Hollande gets into power in France and then I think all bets will be off.

The_White_Horse

it is the welfare state dragging us all down. there still needs to be massive cuts. the amount of people on over 150k in local councils rose by 13% last year. insanity. no one in local council should be on more than 50k EVER. it should be voluntary really. and if they don't like it, abolish and run everything from Whitehall - economies of scale and all that.

pensions and public sector pay is the main issue in this country in terms of spending and debt. it needs to be sorted.

heathcote123

Wookster wrote: »

The problem is the last Labour government said that they wouldn't over borrow. Then they did, at the first sign of hardship (2001 slow down).

Now they are saying borrow more, again, at the first sign of hardship.

Is it any wander people don't trust them?

Quite. With the amount of 'investing' they did last time, why aren't we rolling in it now?

Sick of politician !!!!!!!!. Even sicker that people allow themselves to be bought with this crap.