Is it possible to become a millionaire (or near to) through investments?

BananaRepublic

talexuser wrote: »

Wrong again, I hate the labour party because they are too stupid to even make themselves electable, let alone convince competent to run the economy. Do not have the arrogance to ascribe views to others they do not have just because you don't agree with them, it is a very cheap tactic. However it is easier than actually responding to the perfectly valid point that Osbourne was just as spectacularly clueless in his pre-crisis economic analysis.

I've seen plenty of criticism of the Tories here, precious little criticism of Labour, and a huge reluctance to assign any blame for 2008, the conclusion is obvious. Incidentally Labour under Blair was most certainly not stupid, although Blair's tendency to move ministers around before they could master their brief, and his abhorrence for cabinet government did not contribute greatly to success or lack of.

talexuser

BananaRepublic wrote: »

I've seen plenty of criticism of the Tories here.

Shock news, but it is possible to criticise government policy (or hypocrisy) without being a labour voter or supporter. Your failure to address the Osbourne view on pre-crisis Ireland is apparent.

BananaRepublic

talexuser wrote: »

Shock news, but it is possible to criticise government policy (or hypocrisy) without being a labour voter or supporter. Your failure to address the Osbourne view on pre-crisis Ireland is apparent.

You changed the meaning of my post by quoting a fragment. By the way, his name is spelt Osborne.

racing_blue

Deviation!

From about page 2

talexuser

BananaRepublic wrote: »

You changed the meaning of my post by quoting a fragment.

Fail to understand how, your point was that there was an anti Tory bias here, the conclusion obvious - many are pro labour, including accusing me, I'm not. As for blame for 2008 my point is that Osborne's statements pre-crisis gave little indication a Tory administration would have had a better result, it might even have been worse if the banks actually had a freer reign.

N1AK

BananaRepublic wrote: »

In 2007 they were forced to promise to copy Labour, so as not to frighten people, who were fearful of huge cuts. I happen to think Labour should take blame for the deficit, for overspending and in part for the financial crisis, just as I am happy to blame Thatcher for high interest rates that caused many people to suffer, and doubtless many lost their homes. I don't accept that they can shrug off all responsibility, which is what you seem to think.

As for politicians, we get the ones we elect...

We got what Labour promised when they ran for election, and we kept voting them in. Blaming just Labour is the issue, and the Conservatives doing it when they didn't even try and hold spending to account in opposition is laughable.

I think the point has already been made well that the Conservatives have very little credibility when criticising Labour's spending. They made no attempt to claim Labour's spending was excessive, and even promised to match it. The best argument you can make is that the Tories didn't agree with the spending, but decided that lying to the electorate was better than admitting it.

BananaRepublic

talexuser wrote: »

Fail to understand how, your point was that there was an anti Tory bias here,

Then re-read the thread.

BananaRepublic

N1AK wrote: »

We got what Labour promised when they ran for election, and we kept voting them in. Blaming just Labour is the issue, and the Conservatives doing it when they didn't even try and hold spending to account in opposition is laughable.

The issue I had was blaming just the Tories including blaming them for the deficit. Mind you, Labour did handle the miner's strike badly.

Incidentally, the film about Thatcher came with a warning, "Not suitable for miners". Sorry, bad joke.

BananaRepublic

racing_blue wrote: »

Deviation!

From about page 2

Indeed, maybe we can all agree to ignore the political nonsense, and get back to how to become a millionaire.

grey_gym_sock

BananaRepublic wrote: »

Firstly I am not 'rather obsessively anti-labour.' There have been a stream of anti-Tory posts in this forum (including petty personal abuse directed at Tory politicians) which prompted my earlier post. You are right that the Tories were for some time egging on the Labour deregulation of banks.

perhaps it is more that you have fallen for the austerity narrative, including the notion that part of the problem was labour spending too much. the real problem was entirely to do with the finance sector, and failure to regulate it.

Secondly it is well documented from first hand sources that during the Blair regime, Gordon Brown did his best to limit Blair by severely restricting spending. Once Brown took control, he unleashed public spending.

it is true that labour kept spending down for about the first 5 years they were in government, and spent a bit more freely in the next 5 years. however, the effects on outstanding government debt were pretty small: the debt-to-GDP ratio first fell from about 40% to the low 30s, and then rose again, retracing most of the fall. then the financial crisis hit, and the ratio rocketed to about 80% .

complaining about the 5 pre-crisis years of slowing growing debt is a bit ridiculous, when that 5 year trend would have had to continued for about 50 years before it took the debt ratio to where the financial crisis took it in just a few years. and the current ratio is not even worryingly high (compared, say, to a ratio over 200% after world war II). it would be worrying if it rocketed up again, but its being around the current level is not a crisis in public debt at all: that is pure fiction.

When you use phrase such as "if we want to spend on more health and education, the money to pay them can always be created." it makes me worry. We were on the way to having our credit status downgraded, which would have meant even higher debt repayment costs.

the UK's credit rating was downgraded, in 2013. perhaps the reason you missed/forgot that is that it's of no importance. the cost of government borrowing has continued to fall since the downgrade.

why is it of no importance? because if you are, say, a UK pension fund, with liabilities in sterling, then gilts (which are promises to pay amount in sterling, made by the UK, which has the power to create any amount of sterling) are the ultimate safe asset for you. credit ratings can't change that. of course, if you invest in corporate bonds, you may well look at their credit ratings, because their are many issuers of corporate bonds to choose from - but there is only currency issuer for sterling, the UK.

That is why they 'slashed' spending, to use your emotive term. Ask yourself why the Liberal coalition partners were in agreement with the deficit reduction. It was not sustainable. I am sure an earlier post used the term 'investment'. The government uses that term to avoid saying spending. Balls et al orignally talked about 'investing' our way out of the deficit. They eventually agreed that the deficit had to be cut dramatically.

forget the liberal democrats. (and balls to balls .)

the austerity narrative is economically illiterate. it ignores some basic economic principles which keynes explained over 50 years ago.

go back to the 1920s and 1930s. "laissez faire" economists thought that the State should do as little as possible to interfere with the economy; and in the name of "sound finance", the State held down spending in the face of recessions. these policies were a complete disaster: they led to the Great Depression of the 1930s.

the economy turns out to be an inherently unstable system. when things start to get worse (for whatever reason), employers cut jobs, and cut investment, and households spend less when they lose - or fear losing - their jobs, which leads employers to cut further, and so on. the process does not automatically fix itself: it can become trapped in a depression.

the 1 economic actor who is in a position to do something about this is the government. it alone has the scale to make a difference. it can choose to create jobs, and the workers who get those jobs will spend more, which leads to further indirect job creation. (this is what the 1930s New Deal in the US was trying to do, with partial success - though the government didn't spend enough to completely shake off the depression until world war II.)

now this can work even if the jobs which the government initially creates are doing something completely useless - hence keynes' comments about how they could just bury money underground, and leave it to private enterprise to dig it out. but of course it is even better if the spending is on things which increase the productive capacity of the economy, i.e. investment in infrastructure, and improving the workforce's skills. this is where investment has some relevance - though it would be a mistake to overlook skills, too, though they don't count as investment because you can't put them on a balance sheet.

this is why we should have a counter-cyclical fiscal policy, i.e the government should spend more when the economy is doing badly, less when it is doing well (though it should still usually have a deficit then, just a smaller 1 - because the debt-to-GDP can fall even when you have a deficit, providing you have enough growth).

now, in fact we do have a counter-cyclical fiscal policy automatically nowadays, in a way we didn't in the 1930s, because some kinds of government spending (e.g. unemployment benefits) rise automatically when the economy falters - and this is good, not just for ppl who lose their jobs, but also as a stabilizer on whole economy, to make recessions less severe; and we have taxes which automatically take less money out of the economy in a recession. this is why things are not anywhere near as bad in the 1930s (in the UK, or in most countries - though they may be as bad in, say, greece).

so these automatic stabilizers are very useful, and they work even with no changes of policy from the government. the question is about what the government should do on top of that. a sensible policy, in the face of a major crisis, is to go further than the automatic stabilizers, and spend more, for instance by bringing forward proposed infrastructure projects, increasing support for training, and so on. the austerity line is to do the exact opposite, i.e. to hold down government spending - it will still increase, due to the stabilizers, but to make the increase smaller than it would otherwise be. this is an insane policy, because it deepens and prolongs the recession, or - if the austerity is milder - makes the recovery very weak and slow.

this is exactly what we've seen. in the last couple of years of labour government, they did do a few things to try to try to stimulate a recovery - e.g. temporarily cutting VAT. did they do enough, or the right things? i doubt it. where was the massive housebuilding programme, or big investments in clean energy? but at least they were going in the right direction, i.e. providing some policy stimulus in a recession.

then the tories got in, and started with austerity policies. they nearly killed the nascent recovery, and in 2012 they backed off on austerity, which allowed some recovery. but it has been the weakest recovery from a recession since the south sea bubble, almost 300 years ago (if we should rely on such old statistics - perhaps we should just say the weakest since we have decent statistics). we've had enough austerity to keep the economy very weak, and they appear to be planning stronger austerity again (mainly with the actual cuts delegated to local authorities), though of course they may water it down again.

i've hardly mentioned the deficit, and mostly talked about the state of the economy. because, if we look after the economy, the deficit will look after itself. get the unemployed and under-employed ppl fully employed, and better paid, and they will claim less in benefits, and pay more taxes, and spend more, and hence the private sector will create more jobs, and invest more, and you get a virtuous circle. as long as we have a weak economy, the deficit will remain stubbornly high. that is why osborne has failed to cut the deficit quickly, despite trying both more and less severe versions of austerity.