Re~Stirred Forum

When is the medicine going to start and when are they going to stop blaming all manner of things for the recession.

http://www.guardian.co.uk/business/2012/jul/25/george-osborne-economy

it appears Osborne today had no answers, the excuses do not wash. the problem is it is not even, in the SE corner there is no recession whereas in other areas we are suffering ...

the only way the govt can meet the 'revised' deficit targets as growth forecasts are going to be way off are futher cuts before the worse of the ones we had before come in ...

got a familar ring to it

Watching George on the news I was struck by how low our national aspiration has become.

Do you remember when we used to compare ourselves in economic terms with France, Germany and even optimistically Japan?

Now the only comparisons the Government can dig up are Spain and Greece.

Aim for the best, not avoiding being the worst.

We, however, started out where Spain and Greece were.

Completely untrue. The four quarters from Oct 2009 to Sept 2010 showed continuous economic growth between 0.4% and 1.1%. Brown and Darling had started to get the UK out of the 2008 crisis. If Spain and Greece had that performance at present the eurozone problems would be far less serious. It was done at the price, it's reasonable to say, of a public sector deficit which had to be cut. But it's George Osborne's complete mismanagement of the economy since which has produced the worst economic results since heaven knows when.

John can you confirm that spain's budget deficit is lower and so is the total debt ?

the ONLY reason they are struggling in the market is that people in the city are expecting them to take on bank debts.

If I was them I would say stuff you and let the banks collapse, it has come to that , no more state aid anywhere should go to bail out the banks anymore.

Do you actually believe that?

Or do you just know that you have to keep saying it to at least create the pretence that your government has a viable strategy?

Can't you see that what the Lib Dems have signed up to, something that goes against the grain of Lib Dem thinking pretty much since the party's inception, is hurting your party and many of the people in it for no discernible reason other than bone-headed ideology?

If the practical effects of austerity weren't so horribly damaging then what this government is doing in office would be comical. But it really isn't funny.

You know what? I think he does believe that.

"Brown & Darling"? That period was simply the lull between the end of the banking crisis and the predictable start of the soverign debt crisis. Note everyone's trajectories during that period (except Greece who just wouldn't even pay lip service to Austerity and at least pretend....!)



The other thing this graph shows is that if you do as Spain did in 2010 and duck balancing the books to bet on growth (not too deep, not too fast), then you can indeed buck trend for a while. Till gravity catches up....
Spain's Zapatero bought a year that will cost it five in the long run. Balls really should look what's happening in Spain today before he opposes every spending cut. His approach is kind of like trying to cure a hangover with another binge drink.

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interesting you mention Spain, as the figures show we went further in deficit reduction and yet look at the same point now.

Spain's problems are a banking/housing one and so frankly are the worlds. the scary thought is that no one really seems to realise this. the reason why ?

Well the Banking system wants the govt's to protect it and the question we should ask is whether we should but the fear is of what happens if we let them go.

235,000 jobs have been created in the UK last six months - terrible.

What sort of jobs though? Full-time, part-time, employed, self-employed?

and where ?

how many Olympic related for example ?

My impression is that unless there is a Euro collapse or an oil crisis ( there could very well be both ), we should just tough it out. Keep on cutting the deficit; ensure business taxes are low and stable and reduce red tape and regulation.

If either of the two events mentioned occur, then that will be the time for Plan B. Not before.

Just like unemployment figures....if you don't like them then change how you define unemployment and amazingly they'll drop !
Education......if your nation's standards are continually dropping in world terms, just make the exams easier and pretend you've been improving year upon year for the last 30.
Jobs...put people out of work so they can't support their families, but let them push supermarket trollies for a few days a week, then pretend it's the same.
It's baseless twaddle, smoke and mirrors.

A deceptive and distorted graph, Guy, showing single years in that enormous way, apparently impressive but actually rather broad-brush. It nonetheless shows UK doing significantly better than Spain or Greece in 2010. It's since then we've gone over the precipice. Point made.

Just hilarious! It was a direct response to your distorting 'single year' apperently impressive data in your post at 21:16 which you implied was down to the policies of Brown and Darling- I thought it useful to add another few years and countries for context.




What point? Things have deteriorated again since the Soverign debt (and Euro) crisis began? Hold the front page.

In 2009/2010 Greece and Spain were trying what Balls now suggests (resist pressure to Balance the books and hope government spending keeps the economy afloat). It shows that this failed utterly in Greece, but that it did give temporary respite in Spain, but as we know now that subsequently just stored up further trouble for the Spanish which they're living with today.

Obviously for Guy's sake I need to make this very simple point again. Here is the BBC growth tracker:

http://www.bbc.co.uk/news/10613201

and you will see that under Brown and Darling by 2010 the economy had recovered well from the banking crisis with quarters of consistent growth. How helpful of you Guy to suggest that other economies were growing as well (but to prove that we aren't like Greece and Spain, because they weren't). Given how interdependent we all are that growth is just as well. It's also a tribute to Brown's international leadership in the banking crisis. I was never his greatest fan, but this was him at his best.

Now look at the end of the graph and you will see just how big a mess George Osborne has made of the British economy.

None of this is to suggest that we didn't need, after the special circumstances of 2008, to cut the public sector deficit. After all, we had to bail out all those spendthrift bankers (or did we? but we did). But George Osborne's fixation, which Guy shares, is proving disastrous.

Loving the graph, Guy. It takes a particularly one-eyed person to spot the benefits of Brown and Darling's pre-election spending splurge, never mind praise them. We'll be paying the price for Labour's fiscal diarrhoea for years to come.

the coalitions economic strategy has clearly failed its missed its important targets, its assumptions in 2010 were all way off,and have diverged from econmic reality as each quarter has progressed

correlation does not imply causation but the Govt doesnt even have that wheras critics of austerity do - whats happend fits our arguments back in 2010.

we are now in the argument about why this is - to what extent its stuff out of the uk govts control etc .

they had an idea and tried it and it failed - politically i dont think this matters as much as people assume - full monetarism was tried in the early eighties and was also a dismal failure - what happend was that thatcher and the monetarists were able to change course without admitting it and the whole period was airbrushed out of the thatcher myth.

I just wonder what it takes for an economic strategy to be falsified ?
I suspect that what happens is that govts of whatever political shade just keep on banging away while the 'new paradigm' starts taking shape as the govt 'muddles through'. If your unlucky enough to be the govt at the end of the paradigm you end up making the major u-turn.

weve had osborne putting up the white flag last month with the further QE/credit easing to guarantee loans,. It probably wont work but its the last stop before FISCAl policy makes a return and at least the groundwork for using the govt balancesheet is there.


I think the Euro crisis provides the cover - If they leave it too late they wont be able to bullshit about low interest rates anymore because the 'money' end of the economy could be dominated by negative rates.

"We"? You mean you are returning to Britain to pay your taxes?

I'm reading Steve Keen's debunking economics (the updated version) at the moment and he asks what does it take for neoclassical economics to be falsified as evidence doesn't seem to matter. Faith based economics seems to be the default position here.

I remember sitting in a pub with Dominic in 2010 and saying that the coalition's economic strategy wouldn't deliver growth but instead see the UK economy bounce along the bottom and certainly wouldn't deliver the reduction in the deficit required. This is looking worse than I thought in 2010.

Watching Newsnight last night was actually quite scary because the language being used to describe the economy didn't seem to reflect what is actually happening. My big fear is that we'll end up in a vicious spiral as Paul Mason described but without the understanding among the political classes to grasp why its occurring. Last week's This Week saw Simon Jenkins talk about a genuine fiat response to the crisis and seeing the blank faces of Michael Portillo and Oona King not being able to grasp that simple concept was very worrying.

We're living in the age of cargo cult UK economics...

Denis Healey always used to say that political economics was a branch of applied psychology.

Denis Healey always used to say that political economics was a branch of applied psychology.

It must be like herding cats.

I first heard of neoclassical economics c.1972 in a discussion in Cambridge University Socialist Society. This was the time of the great Neo-Classicism exhibition at the Royal Academy, and I remember syaing, out of the meeting, that it seemed very nice because the architecture was wonderful so why not the economics? Mike Gapes (now MP for Ilford) put me right.

you were at the scene of its death a few years earlier
http://en.wikipedia.org/wiki/Cambridge_ ... ontroversy

Though it zombie'd on regardless.


I dont pretend to understand the maths in the famous cambridge debates but I think the reason mainstream economics keeps on telling people that the sun goes round the earth is threefold
1) economic ideas rarely die as a result of evidence or argument ,they are always coming back because they are useful for certain groups and interests .
2) the economy is always changing so what might seem a good hypothesis for 30-40 years starts throwing up more and more problems and it seems reasonable to try something different.
3) Sraffa etc were very good at pointing out how Neoclassical economics was false but they couldnt come up with a better theory - beyond the keynesian ideas which were becoming discredited.

As I said, developing a mathematical model for herding cats might be easier. There are arguments that Keynesian economics were a bastardisation of Keynes (just as Marxism is a bastardisation of Marx's writings) and I have a little sympathy. Certainty it became cruder.

As long as we don't deal with the elephant of money/credit creation then we're doomed to repeat our failures.