If you're undecided who to vote for
Comments
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guinea wrote:
High prices are bad for everyone. A big crash is needed.
As a saver, I'd like to see higher interest rates and affordable housing for all.
So you'd like to see a lot more people buying houses (mortgage) but then an increase in the interest rate to make sure they are all paying through the nose for it.
Well done, don't think you'll be getting my vote!0 -
Though I'm more of a social liberal than a conservative and have an instinctive distrust of Cameron, I find this attack on Cameron completely unfair (oh, and I wear a helmet too...):
1123: David Cameron comes under attack from safety campaigners after he was pictured cycling without wearing a helmet. Headway, the brain injury association, says it is "deeply disappointed" to learn of photographs taken of the Conservative leader leaving his home and arriving at the House of Commons with his headgear dangling from his handlebars.
( http://news.bbc.co.uk/1/shared/election2010/liveevent/ )
Do Brown or Clegg wear a helmet?0 -
Brown is a helmet.0
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ronnold wrote:I can't believe what I'm reading. Half of you are news of the world fascists and you other half are just massively misguided.
....
1 trillion = million x billion (1 000 000 x 1 000 000 000) seconds in a year 31 556 926
Do you think constantly spending more money than you earn is sustainable?
... or is it greedy, irresponsible and childish.
1 trillion = thousand x billion (1 000 x 1 000 000 000)
Debt is somewhere between 1 and 3 trillion (depending what you include). Our total debt
(public and private) vs GDP is the highest in the world.
Labour have said they'll half the deficit, not the debt ... there's a massive difference.
If we keep going they'll be a bond strike. At that point interest rates go through the roof
or we print more money and continue to follow the Zimbabwe model.
0 -
TheStone wrote:ronnold wrote:I can't believe what I'm reading. Half of you are news of the world fascists and you other half are just massively misguided.
....
1 trillion = million x billion (1 000 000 x 1 000 000 000) seconds in a year 31 556 926
Do you think constantly spending more money than you earn is sustainable?
... or is it greedy, irresponsible and childish.
1 trillion = thousand x billion (1 000 x 1 000 000 000)
Debt is somewhere between 1 and 3 trillion (depending what you include). Our total debt
(public and private) vs GDP is the highest in the world.
Labour have said they'll half the deficit, not the debt ... there's a massive difference.
If we keep going they'll be a bond strike. At that point interest rates go through the roof
or we print more money and continue to follow the Zimbabwe model.
He's still right about the Tories though, which leaves us a bit stuck really. I'm starting to think a Lib/Lab coallition might not be that bad, with Vince Cable keeping spending realistic. Then again, the uncertainty may undermine economic recovery. I really do think we'd be stuffed with Dave and Gideon though - they don't give the impression of knowing what they are doing, beyond doing an OK PR job (and they haven't exactly got the toughest opposition in that respect...)0 -
You'd really want Brown and Mandy still near the levers of power?0
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I think a hung parliament could be disastrous, whilst there is no doubt that the economy would be in safe capable hands with Vince Cable at the helm, I fear that a hung parliament would get very little done...
I don't trust any of Brown's cabinet and cronies, Mandy just exudes sliminess like an old Bond villain, Hattie Harman seems to be a bit of a nutter.
Having said that I'm not sure about the shadow cabinet, who seem a bit gaffe prone at times.
The liberals seem to have the best politician of any party in Cable, however, I think that the liberals have very little chance of getting any real sense of power even in a hung parliament, which is a shame.You live and learn. At any rate, you live0 -
Its a pretty rotten choice, but I know if the Tories got back in I'd be gutted. Maybe if Labour get another term someone might emerge with the balls to take on and beat Brown? Or is that just wishful thinking...
It reminds me of the London mayoral election, where we had a choice of corrupt Ken, buffoon Boris or Brian flipping Paddick. The supposed "greatest city in the world" deserves so much better.0 -
Agree. There is no choice.
Really want Brown and the rest of his idiots out, but then we've got Cameron and
Osbourne. Ahhh!!!
In some ways I like Vince. He's the only one who understands what the problem is, but
his solution seems to be to print more and I can't agree.
We're all doomed.0 -
I feel a distintively anti-Conservative element to this thread. I realise that left of centre is the norm for anyone under 50 these days but I for one am sick of high public spending. I want the Conservatives in and I hope that they turn out to be more right wing (at leat economically) than they are promising. None of the parties go far enough with spending cuts in my opinion. Also I don't buy this spend your way out of recession cr*p.
I realise that my views (eg cutting back drasitically on the NHS & reforming it) will make Ronold class me as a 'News of the World Facist' (which sounds like snobbery to me anyway). However some of my other views such as scrapping Trident would not fit into this pigeon hole neatly.
Anyway, the Conservatives are clearly the best choice even if they need Carmeron to make themselves palatable to Middle England.'Happiness serves hardly any other purpose than to make unhappiness possible' Marcel Proust.0 -
TheStone wrote:passout wrote:Also I don't buy this spend your way out of recession cr*p.
It's like drinking your way out of a hangover.
...except leaving a worse hangover for your kids, who didn't even get to have any booze.
Now I understand VERY little economics but I thought this was a sound idea and is what keynesian economics is based on which has been around a long time?Mañana0 -
pb21 wrote:TheStone wrote:passout wrote:Also I don't buy this spend your way out of recession cr*p.
It's like drinking your way out of a hangover.
...except leaving a worse hangover for your kids, who didn't even get to have any booze.
Now I understand VERY little economics but I thought this was a sound idea and is what keynesian economics is based on which has been around a long time?
Yes.
Recessions are a lack of people and businesses spending. Growth is a growth in the amount people and businesses spend.
Gov't spending aims to cover for that drop in spending.
It's absolutely fundamental to macro-economics.
This guy explains it very simply:
http://taxesandbudget-blog.ncpa.org/can ... recession/
Also:
http://www.guardian.co.uk/politics/2010 ... -recession
and http://www.guardian.co.uk/politics/2010 ... ts-deficit0 -
To an extent.
In a ideal world the govt would run a surplus in the good times, saving money or paying
off debt to act as a buffer in the bad times.
In this case, they spent and borrowed loads (most off balance sheet) in the good times
and now borrowing quite staggering amounts to keep GDP level.
There are two problems.
1- the amount of borrowing will eventually cause interest rates to rise. Double dip anyone?
2- the debt interest must be paid off, so increasing the debt decreases the amount available
for spending.
Public spending has to be cut quite considerably. You can do it now and take the impact
of the extra recession (less spending, less gdp, more unemployment), or you can put it
off hoping the private sector will eventually pick up the slack. With higher taxes and IRs
this is almost impossible, so we slowly, blindly crawl towards state failure.
In my opinion, they'll print more money and we'll have a currency failure first.0 -
Gov't spending should only be cut once it is assured that it won't send the economy into recession.
Recessions are not just bad in terms of the economy, but have massive social and inidvidual costs. It's these that need to be avoided.
They are to be avodied at all costs, even at the expense of faster growth. After all, why else do we want economies to grow?
When things are growing, even if slowly, it's ALWAYS better than a recession.
Also, it is the biggest global recession for 80 years. It was MASSIVE. It's only expected that it's going to be an expensive recovery. I can't see how anyone could think it wouldn't be.0 -
Rick Chasey wrote:Gov't spending should only be cut once it is assured that it won't send the economy into recession.
Recessions are not just bad in terms of the economy, but have massive social and inidvidual costs. It's these that need to be avoided.
They are to be avodied at all costs, even at the expense of faster growth. After all, why else do we want economies to grow?
When things are growing, even if slowly, it's ALWAYS better than a recession.
Also, it is the biggest global recession for 80 years. It was MASSIVE. It's only expected that it's going to be an expensive recovery. I can't see how anyone could think it wouldn't be.
And how long will that be - six months, 2 years, 5 years? How much money will we have spent in that time to avoid a recession which we proably can't avoid anyway? It's bad enough that our boom was largely based on government spending, but this.......? No, we need to start making cuts (or at least start planning the cuts) now. Also there are plenty of economists who agree with this - the Coservastives paraded them recently, just as Labour did for the other point of view. The 'experts' (few of whom predicted the creit crunch) are seem quite divided on this to me.'Happiness serves hardly any other purpose than to make unhappiness possible' Marcel Proust.0 -
TheStone wrote:To an extent.
In a ideal world the govt would run a surplus in the good times, saving money or paying
off debt to act as a buffer in the bad times.
In this case, they spent and borrowed loads (most off balance sheet) in the good times
and now borrowing quite staggering amounts to keep GDP level.
There are two problems.
1- the amount of borrowing will eventually cause interest rates to rise. Double dip anyone?
2- the debt interest must be paid off, so increasing the debt decreases the amount available
for spending.
Public spending has to be cut quite considerably. You can do it now and take the impact
of the extra recession (less spending, less gdp, more unemployment), or you can put it
off hoping the private sector will eventually pick up the slack. With higher taxes and IRs
this is almost impossible, so we slowly, blindly crawl towards state failure.
In my opinion, they'll print more money and we'll have a currency failure first.
Good post.'Happiness serves hardly any other purpose than to make unhappiness possible' Marcel Proust.0 -
passout wrote:Rick Chasey wrote:Gov't spending should only be cut once it is assured that it won't send the economy into recession.
Recessions are not just bad in terms of the economy, but have massive social and inidvidual costs. It's these that need to be avoided.
They are to be avodied at all costs, even at the expense of faster growth. After all, why else do we want economies to grow?
When things are growing, even if slowly, it's ALWAYS better than a recession.
Also, it is the biggest global recession for 80 years. It was MASSIVE. It's only expected that it's going to be an expensive recovery. I can't see how anyone could think it wouldn't be.
And how long will that be - six months, 2 years, 5 years? How much money will we have spent in that time to avoid a recession which we proably can't avoid anyway? It's bad enough that our boom was largely based on government spending, but this.......? No, we need to start making cuts (or at least start planning the cuts) now. Also there are plenty of economists who agree with this - the Coservastives paraded them recently, just as Labour did for the other point of view. The 'experts' (few of whom predicted the creit crunch) are seem quite divided on this to me.
let me put it this way. The reason I spend so much time on this thing is because I have no job, though not for want of trying.
I was asked to a final round interview for a public sector job, was informally accepted, only to be called up to say that because of public spending cuts, the position is no longer available.
Now, am I hardly going to celebrate by going out and spending lots of money. It's unlikely to be a coincidence that my first bout of depression coincided with 3 final round job rejections.
I'm not particularly asking for comments on my position, but it's a perfect illustration of what cuts do.0 -
Labour is better for the NHS and Charity sector IMO (that's the line from my health policy based job - in the sector).
Spending to restart the economy is also a pro-Gordon stance, which makes sense. Something the Tories dispute.
I don't like Gordon Brown however and the only reason I would vote Tory is because of that, which seems to be the basis of their election campaign and manifesto. But it really isn't a justifiable reason at all.
So I'll either vote Lib Dem or Green Party (though there stance means more tax),Food Chain number = 4
A true scalp is not only overtaking someone but leaving them stopped at a set of lights. As you, who have clearly beaten the lights, pummels nothing but the open air ahead. ~ 'DondaddyD'. Player of the Unspoken Game0 -
As we (or the government) own most of the banks can we not just take a % of their profits (in proportion to what we own) and put that back into the coffers? A party willing to commit to this and promote it as a global policy would get my vote. Some of these banks earn more than the UK as an entity does. WE bailed them out, WE deserve a payback more than other shareholders do0
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zanes wrote:nolf wrote:
Choose a course you can get really involved in, beacuse it's all about your own work.
He mentions 8 hours, as a History Undergrad I generally have 4 or less hours a week. If I didn't love my subject, theres no way I would do the work for it.
I'd just point out taught time varies massively between courses and universities. Doing MEng Electronics (guess where
) My taught time for the first two years was 15-20 hours a week, plus 1-1.8x that (not counting exam periods) personal study.
And I can tell you, from my placement year, that's a jokingly small amount of work compared to full time working.
Edit : Ronnold above sums up all that is laughable about the labour party imho.
Having re-read my post thats not quite what I meant.
What I meant was that with only 4 hours of contact hous, all of the work is self motivated study. I still do the 40 hours (actual 40 hours, takes me about 45-50 hours in the library, plus a few hours at home, to do this), but it's all on my lonesome.
My general point was that an arts/humanities course is more self motivated, and so you really have to love it."I hold it true, what'er befall;
I feel it, when I sorrow most;
'Tis better to have loved and lost;
Than never to have loved at all."
Alfred Tennyson0 -
Rick Chasey wrote:pb21 wrote:TheStone wrote:passout wrote:Also I don't buy this spend your way out of recession cr*p.
It's like drinking your way out of a hangover.
...except leaving a worse hangover for your kids, who didn't even get to have any booze.
Now I understand VERY little economics but I thought this was a sound idea and is what keynesian economics is based on which has been around a long time?
Yes.
Recessions are a lack of people and businesses spending. Growth is a growth in the amount people and businesses spend.
Gov't spending aims to cover for that drop in spending.
It's absolutely fundamental to macro-economics.
Ummm, rubbish...
This recession was not led by a demand deficiency, and increased government spending will not solve it. We need the free flow of capital, and possibly in the short term government securities.
Aggregate demand is made up of several things, C (consumption) forms a significant part of this, but is only 1 of the classic 5 factors. Basic economics 101, GDP = the sum of (C, Investment, Government spending, net eXports) minus iMports.
Government spending to boost demand is only worthwhile in the very short term, and only if it's a demand deficient recession. Governments contain a lot of money, so in the short term they can boost demand by just spending a lot; building a new road, creates jobs, employees spend money, (the money multiplier) and boosts economy in general, and then get it back later through spending cuts/higher taxes.
However, Governments are infamously innefficient at allocating resources when compared to a free market, so in the long run (as government spending is in effect a withdrawal from the free market as it comes from taxation or bonds, money which could be invested elsewhere more efficiently by private enterprise), high levels of government spending are less efficient than less tax and increased private investment. Once a demand deficient recession is addressed, government spending should be cut back immediately.
However this recession was not caused by demand deficiency, but overleveraged banks, leading to a freeze in the free flow of capital.
Low consumer spending, minimal interbank lending leading to a shrink in M1 and M2 money supply (a lack of liquidity within the market), leading to the bankrupcy of many profitable businesses, and then unemployment. Lots of the businesses were profitable, they just needed some cash.
To deal with this recession requires the tools of monetarism. Demand boosting has it's place, but not now! With unemployment remaining stubbornly low, so long as there is sufficient money available and credit markets remain stable, and free, things should go well. With interest rates not boosting demand, increasing interest rates to encourage savings (underwitten by the government) could provide a short term answer to this, boosting bank deposits (not from ordinary consumers, but largely from foreign investors who keep their money in UK banks), giving them more cash to invest, boosting money supply.
The quantitative easing measure taken was also a good response, immediately boosting cash(1). However now these have been dealt with, I sincerely believe that to deal with the recession doesn't require increased government spending/investment, but instead there needs to be an encouaging of private enterprise and business. Hence I am diametrically opposed to the suggestion of increases on national insurance, as it directly penalises business investment in the UK, which is exactly what we need right now (as govt. investment is so innefficient!).
Monetarism is rooted in our economy these days (even in labour, look at their decision to let the Bank of England deal with interest rates, a monetarist idea)
(This is written purely in terms of market efficiency and whats best for the economy, a smaller state. The arguments for a larger state can, in my view, only be supported by a moral or ethical argument, that overides the obvious economic advantages of a free market. There is a necessity of certain public goods, its just less efficient... So don't shout at me.)
(1)- see Bernankes speech here explaining a lot of the background and quantitative easing:
http://www.federalreserve.gov/newsevent ... 90113a.htm"I hold it true, what'er befall;
I feel it, when I sorrow most;
'Tis better to have loved and lost;
Than never to have loved at all."
Alfred Tennyson0 -
nolf wrote:Rick Chasey wrote:pb21 wrote:TheStone wrote:passout wrote:Also I don't buy this spend your way out of recession cr*p.
It's like drinking your way out of a hangover.
...except leaving a worse hangover for your kids, who didn't even get to have any booze.
Now I understand VERY little economics but I thought this was a sound idea and is what keynesian economics is based on which has been around a long time?
Yes.
Recessions are a lack of people and businesses spending. Growth is a growth in the amount people and businesses spend.
Gov't spending aims to cover for that drop in spending.
It's absolutely fundamental to macro-economics.
Ummm, rubbish...
This recession was not led by a demand deficiency, and increased government spending will not solve it. We need the free flow of capital, and possibly in the short term government securities.
Aggregate demand is made up of several things, C (consumption) forms a significant part of this, but is only 1 of the classic 5 factors. Basic economics 101, GDP = the sum of (C, Investment, Government spending, net eXports) minus iMports.
Government spending to boost demand is only worthwhile in the very short term, and only if it's a demand deficient recession. Governments contain a lot of money, so in the short term they can boost demand by just spending a lot; building a new road, creates jobs, employees spend money, (the money multiplier) and boosts economy in general, and then get it back later through spending cuts/higher taxes.
However, Governments are infamously innefficient at allocating resources when compared to a free market, so in the long run (as government spending is in effect a withdrawal from the free market as it comes from taxation or bonds, money which could be invested elsewhere more efficiently by private enterprise), high levels of government spending are less efficient than less tax and increased private investment. Once a demand deficient recession is addressed, government spending should be cut back immediately.
However this recession was not caused by demand deficiency, but overleveraged banks, leading to a freeze in the free flow of capital.
Low consumer spending, minimal interbank lending leading to a shrink in M1 and M2 money supply (a lack of liquidity within the market), leading to the bankrupcy of many profitable businesses, and then unemployment. Lots of the businesses were profitable, they just needed some cash.
To deal with this recession requires the tools of monetarism. Demand boosting has it's place, but not now! With unemployment remaining stubbornly low, so long as there is sufficient money available and credit markets remain stable, and free, things should go well. With interest rates not boosting demand, increasing interest rates to encourage savings (underwitten by the government) could provide a short term answer to this, boosting bank deposits (not from ordinary consumers, but largely from foreign investors who keep their money in UK banks), giving them more cash to invest, boosting money supply.
The quantitative easing measure taken was also a good response, immediately boosting cash(1). However now these have been dealt with, I sincerely believe that to deal with the recession doesn't require increased government spending/investment, but instead there needs to be an encouaging of private enterprise and business. Hence I am diametrically opposed to the suggestion of increases on national insurance, as it directly penalises business investment in the UK, which is exactly what we need right now (as govt. investment is so innefficient!).
Monetarism is rooted in our economy these days (even in labour, look at their decision to let the Bank of England deal with interest rates, a monetarist idea)
(This is written purely in terms of market efficiency and whats best for the economy, a smaller state. The arguments for a larger state can, in my view, only be supported by a moral or ethical argument, that overides the obvious economic advantages of a free market. There is a necessity of certain public goods, its just less efficient... So don't shout at me.)
(1)- see Bernankes speech here explaining a lot of the background and quantitative easing:
http://www.federalreserve.gov/newsevent ... 90113a.htm
I wasn't giving a suggestion to what caused the recession. You seem to think it was a lack of credit which was what caused the drop in demand, and I'd probably agree. That's not what I was saying however.
I was saying what a recession is. Not why it is. Just what a recession is. From the dictionary: the state of the economy declines; a widespread decline in the GDP and employment and trade lasting from six months to a year.
I can't see how a recession is anything but a drop in demand? Recessions are fundamanetally demand side?
Even if you get stagflation, it's solved with an increase in demand.
It's not the total and absolute solution, but it certainly helps. Why else has every country that has suffered a recession seen a big growth in national debt? Some bigger than others, granted, but the principle remains the same.
And as for unemployment being stubbornly low. I heard a stat the other day that during the worst parts of the '70s, unemployment rates were lower than they are now.
I just don't think it is stubbornly low.0 -
pb21 wrote:TheStone wrote:passout wrote:Also I don't buy this spend your way out of recession cr*p.
It's like drinking your way out of a hangover.
...except leaving a worse hangover for your kids, who didn't even get to have any booze.
Now I understand VERY little economics but I thought this was a sound idea and is what keynesian economics is based on which has been around a long time?
Labour's rather selective approach to Keynes is at fault here. JM Keynes argued that whilst your economy is growing, the government should runa budget surplus, it should spend less than the total tax take in order that when the inevitable downturn comes you have some "slack" in the economy which you can invest into public works to keep unemployment low in the sectors of the economy that are traditionally hit hardest (manufacturing, construction etc).
Labour's folly in their interpretation is that firstly, the UK no longer has any publically owned manufacturing (and a bloody good thing too) and secondly , they rana record deficit (spending more than the tax take and borrowing on the international markets to bridge the gap) in the good times, assuming that house prices would just continue to spiral ever upwards to keep the real value of the loans low.
Sadly, Brown hadn't managed, whatever he protested, to circumnavigate supply and demand in the economy and this plan ceased to work. In order to keep the value of the loans managable and not default he has had to (in the short term at least) print money to inflate away the value of the loans.
The question now becomes how you wish to proceed... DO you want the state to tax ever more of your income and, as a consequence, govern ever more of your activities to pay down a debt it incurred in resolving (or, in my opinion, postponing) a crisis it created or do you wish to see people allowed to keep more of the money they earned and invest it in things they need/want in order to grow a more diverse economy."In many ways, my story was that of a raging, Christ-like figure who hauled himself off the cross, looked up at the Romans with blood in his eyes and said 'My turn, sock cookers'"
@gietvangent0 -
Rick Chasey wrote:I wasn't giving a suggestion to what caused the recession. You seem to think it was a lack of credit which was what caused the drop in demand, and I'd probably agree. That's not what I was saying however.
I was saying what a recession is. Not why it is. Just what a recession is. From the dictionary: the state of the economy declines; a widespread decline in the GDP and employment and trade lasting from six months to a year.
I can't see how a recession is anything but a drop in demand? Recessions are fundamanetally demand side?
Even if you get stagflation, it's solved with an increase in demand.
It's not the total and absolute solution, but it certainly helps. Why else has every country that has suffered a recession seen a big growth in national debt? Some bigger than others, granted, but the principle remains the same.
And as for unemployment being stubbornly low. I heard a stat the other day that during the worst parts of the '70s, unemployment rates were lower than they are now.
I just don't think it is stubbornly low.
I thought a growth in national debt was due to bailing out large financial institutions, along with money creation measures, i.e quantitative easing.
A recession is 2 quarters of negative growth in GDP (yes for some reason they do call it negative growth). While demand boosting measures can help, it's not the root cause of this depression. UK consumers spend a large amount, and are in masses of debt. Encouraging them to spend more money is not prudent, nor a long term answer (and the government spending more money is innefficient). Instead we need to be looking at long term solutions, which may require a re-evaluating of the economy, and structural change. Which will be painful.
Credit fuelled growth, has potentially left us with an overproducing economy. The economy may need to shrink a bit to go back to mure sustainable levels.
Take the car industry for example. The car industry is way too big for the real world demand, and for decades has relied on large government subsidies (especially in the USA) to survive. In classical economics terms, the long term aggregate supply of this market, is too big compared to the actual real demand, and is relyiant on subsidies to make up the difference.
While a demand boosting measure could fix it, the problem is supply, rather than demand. The car inustry as a whole needs to shrink to make up for diminished future demand. Subsidies in this instance are preventing the efficient allocation of resources and penalising people elsewhere.
Demand boosting measures may help prevent unemployment from falling, but as unemployment remains low (unemployment was low in the 70's because that was before anything was done about the inflation. Need to compare to the 80's when it was a lot higher), we should make the most of the opportunity to fix the long term problems."I hold it true, what'er befall;
I feel it, when I sorrow most;
'Tis better to have loved and lost;
Than never to have loved at all."
Alfred Tennyson0 -
Rick Chasey wrote:nolf wrote:Rick Chasey wrote:pb21 wrote:TheStone wrote:passout wrote:Also I don't buy this spend your way out of recession cr*p.
It's like drinking your way out of a hangover.
...except leaving a worse hangover for your kids, who didn't even get to have any booze.
Now I understand VERY little economics but I thought this was a sound idea and is what keynesian economics is based on which has been around a long time?
Yes.
Recessions are a lack of people and businesses spending. Growth is a growth in the amount people and businesses spend.
Gov't spending aims to cover for that drop in spending.
It's absolutely fundamental to macro-economics.
Ummm, rubbish...
This recession was not led by a demand deficiency, and increased government spending will not solve it. We need the free flow of capital, and possibly in the short term government securities.
Aggregate demand is made up of several things, C (consumption) forms a significant part of this, but is only 1 of the classic 5 factors. Basic economics 101, GDP = the sum of (C, Investment, Government spending, net eXports) minus iMports.
Government spending to boost demand is only worthwhile in the very short term, and only if it's a demand deficient recession. Governments contain a lot of money, so in the short term they can boost demand by just spending a lot; building a new road, creates jobs, employees spend money, (the money multiplier) and boosts economy in general, and then get it back later through spending cuts/higher taxes.
However, Governments are infamously innefficient at allocating resources when compared to a free market, so in the long run (as government spending is in effect a withdrawal from the free market as it comes from taxation or bonds, money which could be invested elsewhere more efficiently by private enterprise), high levels of government spending are less efficient than less tax and increased private investment. Once a demand deficient recession is addressed, government spending should be cut back immediately.
However this recession was not caused by demand deficiency, but overleveraged banks, leading to a freeze in the free flow of capital.
Low consumer spending, minimal interbank lending leading to a shrink in M1 and M2 money supply (a lack of liquidity within the market), leading to the bankrupcy of many profitable businesses, and then unemployment. Lots of the businesses were profitable, they just needed some cash.
To deal with this recession requires the tools of monetarism. Demand boosting has it's place, but not now! With unemployment remaining stubbornly low, so long as there is sufficient money available and credit markets remain stable, and free, things should go well. With interest rates not boosting demand, increasing interest rates to encourage savings (underwitten by the government) could provide a short term answer to this, boosting bank deposits (not from ordinary consumers, but largely from foreign investors who keep their money in UK banks), giving them more cash to invest, boosting money supply.
The quantitative easing measure taken was also a good response, immediately boosting cash(1). However now these have been dealt with, I sincerely believe that to deal with the recession doesn't require increased government spending/investment, but instead there needs to be an encouaging of private enterprise and business. Hence I am diametrically opposed to the suggestion of increases on national insurance, as it directly penalises business investment in the UK, which is exactly what we need right now (as govt. investment is so innefficient!).
Monetarism is rooted in our economy these days (even in labour, look at their decision to let the Bank of England deal with interest rates, a monetarist idea)
(This is written purely in terms of market efficiency and whats best for the economy, a smaller state. The arguments for a larger state can, in my view, only be supported by a moral or ethical argument, that overides the obvious economic advantages of a free market. There is a necessity of certain public goods, its just less efficient... So don't shout at me.)
(1)- see Bernankes speech here explaining a lot of the background and quantitative easing:
http://www.federalreserve.gov/newsevent ... 90113a.htm
I wasn't giving a suggestion to what caused the recession. You seem to think it was a lack of credit which was what caused the drop in demand, and I'd probably agree. That's not what I was saying however.
I was saying what a recession is. Not why it is. Just what a recession is. From the dictionary: the state of the economy declines; a widespread decline in the GDP and employment and trade lasting from six months to a year.
I can't see how a recession is anything but a drop in demand? Recessions are fundamanetally demand side?
Even if you get stagflation, it's solved with an increase in demand.
It's not the total and absolute solution, but it certainly helps. Why else has every country that has suffered a recession seen a big growth in national debt? Some bigger than others, granted, but the principle remains the same.
And as for unemployment being stubbornly low. I heard a stat the other day that during the worst parts of the '70s, unemployment rates were lower than they are now.
I just don't think it is stubbornly low.
On supply and demand - wasn't the credit crunch about supply firstly and foremost? Credit wasn't available as it was before....there was plenty of demand from small businesses half way though expansion etc.
Also that supply and demand argument makes sense only 'if' the spender (including New Labour) has some money! Simplistic I know, but I feel that there is some truth to it.
There are some good posts on here by the way - nice to see some well argued points.'Happiness serves hardly any other purpose than to make unhappiness possible' Marcel Proust.0 -
passout wrote:Rick Chasey wrote:nolf wrote:Rick Chasey wrote:pb21 wrote:TheStone wrote:passout wrote:Also I don't buy this spend your way out of recession cr*p.
It's like drinking your way out of a hangover.
...except leaving a worse hangover for your kids, who didn't even get to have any booze.
Now I understand VERY little economics but I thought this was a sound idea and is what keynesian economics is based on which has been around a long time?
Yes.
Recessions are a lack of people and businesses spending. Growth is a growth in the amount people and businesses spend.
Gov't spending aims to cover for that drop in spending.
It's absolutely fundamental to macro-economics.
Ummm, rubbish...
This recession was not led by a demand deficiency, and increased government spending will not solve it. We need the free flow of capital, and possibly in the short term government securities.
Aggregate demand is made up of several things, C (consumption) forms a significant part of this, but is only 1 of the classic 5 factors. Basic economics 101, GDP = the sum of (C, Investment, Government spending, net eXports) minus iMports.
Government spending to boost demand is only worthwhile in the very short term, and only if it's a demand deficient recession. Governments contain a lot of money, so in the short term they can boost demand by just spending a lot; building a new road, creates jobs, employees spend money, (the money multiplier) and boosts economy in general, and then get it back later through spending cuts/higher taxes.
However, Governments are infamously innefficient at allocating resources when compared to a free market, so in the long run (as government spending is in effect a withdrawal from the free market as it comes from taxation or bonds, money which could be invested elsewhere more efficiently by private enterprise), high levels of government spending are less efficient than less tax and increased private investment. Once a demand deficient recession is addressed, government spending should be cut back immediately.
However this recession was not caused by demand deficiency, but overleveraged banks, leading to a freeze in the free flow of capital.
Low consumer spending, minimal interbank lending leading to a shrink in M1 and M2 money supply (a lack of liquidity within the market), leading to the bankrupcy of many profitable businesses, and then unemployment. Lots of the businesses were profitable, they just needed some cash.
To deal with this recession requires the tools of monetarism. Demand boosting has it's place, but not now! With unemployment remaining stubbornly low, so long as there is sufficient money available and credit markets remain stable, and free, things should go well. With interest rates not boosting demand, increasing interest rates to encourage savings (underwitten by the government) could provide a short term answer to this, boosting bank deposits (not from ordinary consumers, but largely from foreign investors who keep their money in UK banks), giving them more cash to invest, boosting money supply.
The quantitative easing measure taken was also a good response, immediately boosting cash(1). However now these have been dealt with, I sincerely believe that to deal with the recession doesn't require increased government spending/investment, but instead there needs to be an encouaging of private enterprise and business. Hence I am diametrically opposed to the suggestion of increases on national insurance, as it directly penalises business investment in the UK, which is exactly what we need right now (as govt. investment is so innefficient!).
Monetarism is rooted in our economy these days (even in labour, look at their decision to let the Bank of England deal with interest rates, a monetarist idea)
(This is written purely in terms of market efficiency and whats best for the economy, a smaller state. The arguments for a larger state can, in my view, only be supported by a moral or ethical argument, that overides the obvious economic advantages of a free market. There is a necessity of certain public goods, its just less efficient... So don't shout at me.)
(1)- see Bernankes speech here explaining a lot of the background and quantitative easing:
http://www.federalreserve.gov/newsevent ... 90113a.htm
I wasn't giving a suggestion to what caused the recession. You seem to think it was a lack of credit which was what caused the drop in demand, and I'd probably agree. That's not what I was saying however.
I was saying what a recession is. Not why it is. Just what a recession is. From the dictionary: the state of the economy declines; a widespread decline in the GDP and employment and trade lasting from six months to a year.
I can't see how a recession is anything but a drop in demand? Recessions are fundamanetally demand side?
Even if you get stagflation, it's solved with an increase in demand.
It's not the total and absolute solution, but it certainly helps. Why else has every country that has suffered a recession seen a big growth in national debt? Some bigger than others, granted, but the principle remains the same.
And as for unemployment being stubbornly low. I heard a stat the other day that during the worst parts of the '70s, unemployment rates were lower than they are now.
I just don't think it is stubbornly low.
On supply and demand - wasn't the credit crunch about supply firstly and foremost? Credit wasn't available as it was before....there was plenty of demand from small businesses half way though expansion etc.
Also that supply and demand argument makes sense only 'if' the spender (including New Labour) has some money! Simplistic I know, but I feel that there is some truth to it.
There are some good posts on here by the way - nice to see some well argued points.
Nothing to add
But you had to scroll a long way to find that out
Teehee“New York has the haircuts, London has the trousers, but Belfast has the reason!0 -
passout wrote:
On supply and demand - wasn't the credit crunch about supply firstly and foremost? Credit wasn't available as it was before....there was plenty of demand from small businesses half way though expansion etc.
Also that supply and demand argument makes sense only 'if' the spender (including New Labour) has some money! Simplistic I know, but I feel that there is some truth to it.
There are some good posts on here by the way - nice to see some well argued points.
I was talking about aggregate demand (which is the demand of the entire economy), not the specific demand or supply of credit.
That's confusing micro and macro economics.
http://en.wikipedia.org/wiki/Aggregate_demand
A drop in aggregate demand is a shrinking of the economy.
That's what a recession is.
Lots of things cause it, but that's what a recession is.
I can't see how that isn't clear?0 -
Not wishing to wade in on either side, but to those who say they wont bother voting because they live in safe seats: well, true the candidate you vote for may not win, but your vote will be counted.
If a minority party wins a substantial proportion of the vote but gains few (or no) seats then that helps to highlight how rubbish our electoral system is. If you don't vote then there is no record of your views. So vote - so long as it's not for one of the parties I don't like.0
