Macroeconomics, the economy, inflation etc. *likely to be very dull*

15961636465

Comments

  • I freely admit to knowing nothing about the bond markets but surely there is a difference between market sentiment (what the article descibes) and traders trying to short the market for personal gain (what the headline describes)?

    Anyway none of this matters because;
    sovereign currency
    debt far higher in Japan
    Interest rates at historically low levels
    The multiplier effect
    There is no downside to QE
    There is no limit to QE

    All of the above will overwhelm market sentimement and all will be fine so long as we borrow even more and call it investment.

    It's mainly a turn of phrase to illustrate that the bond market can have an outsized impact on the local politics; in that if it moves against a politician or a policy it can sink it quite quickly.

    It's used more often in the context of big EM scenarios where there are far fewer bondholders, enough that sometimes you can corale them in one room.

    There are also instances where big bond investors can hold EM governments over a barrel if they don't agree to certain politics etc.

    do you not think it is a misleading headline and that the average Guardian reader will assume that a few sharp suited chancers can have a disproprtionate impact by gaming the market?
  • rick_chasey
    rick_chasey Posts: 73,203

    I freely admit to knowing nothing about the bond markets but surely there is a difference between market sentiment (what the article descibes) and traders trying to short the market for personal gain (what the headline describes)?

    Anyway none of this matters because;
    sovereign currency
    debt far higher in Japan
    Interest rates at historically low levels
    The multiplier effect
    There is no downside to QE
    There is no limit to QE

    All of the above will overwhelm market sentimement and all will be fine so long as we borrow even more and call it investment.

    It's mainly a turn of phrase to illustrate that the bond market can have an outsized impact on the local politics; in that if it moves against a politician or a policy it can sink it quite quickly.

    It's used more often in the context of big EM scenarios where there are far fewer bondholders, enough that sometimes you can corale them in one room.

    There are also instances where big bond investors can hold EM governments over a barrel if they don't agree to certain politics etc.

    do you not think it is a misleading headline and that the average Guardian reader will assume that a few sharp suited chancers can have a disproprtionate impact by gaming the market?
    Have you read Larry Elliot before? That's entirely the point.
  • I freely admit to knowing nothing about the bond markets but surely there is a difference between market sentiment (what the article descibes) and traders trying to short the market for personal gain (what the headline describes)?

    Anyway none of this matters because;
    sovereign currency
    debt far higher in Japan
    Interest rates at historically low levels
    The multiplier effect
    There is no downside to QE
    There is no limit to QE

    All of the above will overwhelm market sentimement and all will be fine so long as we borrow even more and call it investment.

    It's mainly a turn of phrase to illustrate that the bond market can have an outsized impact on the local politics; in that if it moves against a politician or a policy it can sink it quite quickly.

    It's used more often in the context of big EM scenarios where there are far fewer bondholders, enough that sometimes you can corale them in one room.

    There are also instances where big bond investors can hold EM governments over a barrel if they don't agree to certain politics etc.

    do you not think it is a misleading headline and that the average Guardian reader will assume that a few sharp suited chancers can have a disproprtionate impact by gaming the market?
    Have you read Larry Elliot before? That's entirely the point.
    nope, the begging letter at the bottom of that article told me that I had read 9 Guardian articles in the last 12 months
  • wallace_and_gromit
    wallace_and_gromit Posts: 3,094
    edited October 2023

    I freely admit to knowing nothing about the bond markets but surely there is a difference between market sentiment (what the article descibes) and traders trying to short the market for personal gain (what the headline describes)?

    Anyway none of this matters because;
    sovereign currency
    debt far higher in Japan
    Interest rates at historically low levels
    The multiplier effect
    There is no downside to QE
    There is no limit to QE

    All of the above will overwhelm market sentimement and all will be fine so long as we borrow even more and call it investment.

    It's mainly a turn of phrase to illustrate that the bond market can have an outsized impact on the local politics; in that if it moves against a politician or a policy it can sink it quite quickly.

    It's used more often in the context of big EM scenarios where there are far fewer bondholders, enough that sometimes you can corale them in one room.

    There are also instances where big bond investors can hold EM governments over a barrel if they don't agree to certain politics etc.

    do you not think it is a misleading headline and that the average Guardian reader will assume that a few sharp suited chancers can have a disproprtionate impact by gaming the market?
    Like with all things, there are people who will believe what they want to believe, regardless of how much information they have that might present a contrary view.

    e.g. this time 15 years ago as commercial banks were heading down the pan on seemingly a daily basis, there were folk out there who genuinely believed (because they'd read a bit about Fractional Reserve Banking) that commercial banks could simply credit themselves with cash and thus avoid all the problems they were facing.
  • rick_chasey
    rick_chasey Posts: 73,203
    edited October 2023
    It's almost like the left-wing idea that capitalism is basically at the behest of a few sharp suited chancers who are greedy enough to shipwreck the economy and the people in it, is actually something the Guardian goes after.

    Lucky for them, they have quite a lot of evidence from the 00s that that sort of did happen.
  • wallace_and_gromit
    wallace_and_gromit Posts: 3,094
    edited October 2023

    It's almost like the left-wing idea that capitalism is basically at the behest of a few sharp suited chancers who are greedy enough to shipwreck the economy and the people in it, is actually something the Guardian goes after.

    Lucky for them, they have quite a lot of evidence from the 00s that that sort of did happen.

    Unfortunately though, it's not a symmetric relationship. Spikes in government bond yields and "buyers' strikes" may be an entirely rational response from the entire market (which is largely institutional investors) to government craziness.
  • super_davo
    super_davo Posts: 1,166

    Except it hits the poorest hardest. People who were just under the tax threshold are paying an infinity % more tax, the ultra rich are paying a tiny % more tax. To be expected from this government TBH
    ??? The personal allowance has increased significantly under the Conservative governments. That has benefitted the poorest hugely.
    Whilst this is true, the overwhelming majority of the increase came in the first term, pushed heavily by the Lib Dems as part of the coalition agreement. So I don't think you can give the Tories too much credit for this and certainly not if you're someone that's kicked the LibDems for tuition fees. The personal allowance gone up since then, at a much slower rate, and in this parliament the increases have been much lower than the rate of inflation.

    Do agree it's good policy that simplifies the tax system and benefits the poor; would be good for it to go up further as part of a plan to reduce the amount we pay for "in work benefits" like universal credit.
  • It's almost like the left-wing idea that capitalism is basically at the behest of a few sharp suited chancers who are greedy enough to shipwreck the economy and the people in it, is actually something the Guardian goes after.

    Lucky for them, they have quite a lot of evidence from the 00s that that sort of did happen.

    so are you saying that the Guardian publishes headlines to support it's own agenda but if you read the article it raises the awful possibility that the magic money tree could be dieing?
  • wallace_and_gromit
    wallace_and_gromit Posts: 3,094
    edited October 2023

    ...if you read the article it raises the awful possibility that the magic money tree could be dieing?

    Don't say that to Rick. It's like kicking a puppy!

  • Except it hits the poorest hardest. People who were just under the tax threshold are paying an infinity % more tax, the ultra rich are paying a tiny % more tax. To be expected from this government TBH
    ??? The personal allowance has increased significantly under the Conservative governments. That has benefitted the poorest hugely.
    Whilst this is true, the overwhelming majority of the increase came in the first term, pushed heavily by the Lib Dems as part of the coalition agreement. So I don't think you can give the Tories too much credit for this and certainly not if you're someone that's kicked the LibDems for tuition fees. The personal allowance gone up since then, at a much slower rate, and in this parliament the increases have been much lower than the rate of inflation.

    Do agree it's good policy that simplifies the tax system and benefits the poor; would be good for it to go up further as part of a plan to reduce the amount we pay for "in work benefits" like universal credit.
    There are a couple of non-trivial issues with a high personal allowance:

    i) Large numbers of people then don't benefit from a reduction in even basic rate tax. When the allowance was small, a reduction in income tax essentially benefitted everyone.

    ii) When circa half the working age population don't pay income tax, as was the case before fiscal lag became a big thing, there's a serious chance that taxpayers could be outvoted on fiscal policy by those paying no income tax which could in theory result in a government being elected promising all sorts of freebies for folk who are then not going to be paying for them via the resulting tax rises.
  • rick_chasey
    rick_chasey Posts: 73,203

    It's almost like the left-wing idea that capitalism is basically at the behest of a few sharp suited chancers who are greedy enough to shipwreck the economy and the people in it, is actually something the Guardian goes after.

    Lucky for them, they have quite a lot of evidence from the 00s that that sort of did happen.

    so are you saying that the Guardian publishes headlines to support it's own agenda but if you read the article it raises the awful possibility that the magic money tree could be dieing?
    I've said it a million times - if you have a decade and a half of no growth you have serious problems.

    The longer that goes on, the fewer levers the UK govt has to pull.

    The UK has enjoyed DM status, which means investors give them the benefit of the doubt to engage in counter cyclical spending.

    If the UK continues to have no growth and do stupid things like Truss, it will no longer and it will suffer the curse of EM economies, which means that just when you need to spend the most, the cost of borrowing is the highest.
  • It's almost like the left-wing idea that capitalism is basically at the behest of a few sharp suited chancers who are greedy enough to shipwreck the economy and the people in it, is actually something the Guardian goes after.

    Lucky for them, they have quite a lot of evidence from the 00s that that sort of did happen.

    so are you saying that the Guardian publishes headlines to support it's own agenda but if you read the article it raises the awful possibility that the magic money tree could be dieing?
    I've said it a million times - if you have a decade and a half of no growth you have serious problems.

    The longer that goes on, the fewer levers the UK govt has to pull.

    The UK has enjoyed DM status, which means investors give them the benefit of the doubt to engage in counter cyclical spending.

    If the UK continues to have no growth and do stupid things like Truss, it will no longer and it will suffer the curse of EM economies, which means that just when you need to spend the most, the cost of borrowing is the highest.
    But what if there is no link between growth and borrowing the maximum possible each year.

    If Govt’s could easily influence economic growth then they would all be doing it.
    As you know I believe the best we can hope for is a Govt that does no harm.

    If you remember I predicted that we were two more crises from hitting the economic buffers and proper austerity being forced upon us.

    I did not see debt servicing costs rising so quickly so this may count as one of those crises.

    After 15 years of laughably mild austerity and the highest peacetime tax take we are still borrowing at record levels.

    I genuinely feel that with our demographic and debt servicing costs that we have already gone past the point of no return.
  • rick_chasey
    rick_chasey Posts: 73,203

    It's almost like the left-wing idea that capitalism is basically at the behest of a few sharp suited chancers who are greedy enough to shipwreck the economy and the people in it, is actually something the Guardian goes after.

    Lucky for them, they have quite a lot of evidence from the 00s that that sort of did happen.

    so are you saying that the Guardian publishes headlines to support it's own agenda but if you read the article it raises the awful possibility that the magic money tree could be dieing?
    I've said it a million times - if you have a decade and a half of no growth you have serious problems.

    The longer that goes on, the fewer levers the UK govt has to pull.

    The UK has enjoyed DM status, which means investors give them the benefit of the doubt to engage in counter cyclical spending.

    If the UK continues to have no growth and do stupid things like Truss, it will no longer and it will suffer the curse of EM economies, which means that just when you need to spend the most, the cost of borrowing is the highest.
    But what if there is no link between growth and borrowing the maximum possible each year.

    If Govt’s could easily influence economic growth then they would all be doing it.
    As you know I believe the best we can hope for is a Govt that does no harm.

    If you remember I predicted that we were two more crises from hitting the economic buffers and proper austerity being forced upon us.

    I did not see debt servicing costs rising so quickly so this may count as one of those crises.

    After 15 years of laughably mild austerity and the highest peacetime tax take we are still borrowing at record levels.

    I genuinely feel that with our demographic and debt servicing costs that we have already gone past the point of no return.
    I mean, you're working on a counter factual - we have actual evidence that the American counter cyclical spending post GFC, and the Euro austerity and concern about debt (led by Germany but followed by West Europe, partly in response to the profligate southern problems) and look at the economic performance between the two.

    We can both agree the mid 00s Greek style spending lets to wrack-and-ruin, but we can also agree that cyclical spending and the obsession with debt over growth has also been really costly for Europe.
  • pblakeney
    pblakeney Posts: 26,038
    Our problem was having austerity and heavy borrowing.
    The above may be fact, or fiction, I may be serious, I may be jesting.
    I am not sure. You have no chance.
    Veronese68 wrote:
    PB is the most sensible person on here.
  • rick_chasey
    rick_chasey Posts: 73,203
    pblakeney said:

    Our problem was having austerity and heavy borrowing.

    Borrowing amounts are always relative.

    If you don't grow you'll end up borrowing more anyway.
  • pblakeney
    pblakeney Posts: 26,038

    pblakeney said:

    Our problem was having austerity and heavy borrowing.

    Borrowing amounts are always relative.

    If you don't grow you'll end up borrowing more anyway.
    Done this before, haven't we? Austerity hampers growth and we were borrowing to stand still, not grow. Worst of both worlds.
    The above may be fact, or fiction, I may be serious, I may be jesting.
    I am not sure. You have no chance.
    Veronese68 wrote:
    PB is the most sensible person on here.
  • rick_chasey
    rick_chasey Posts: 73,203
    pblakeney said:

    pblakeney said:

    Our problem was having austerity and heavy borrowing.

    Borrowing amounts are always relative.

    If you don't grow you'll end up borrowing more anyway.
    Done this before, haven't we? Austerity hampers growth and we were borrowing to stand still, not grow. Worst of both worlds.
    Austerity is the opposite of borrowing, right? It's all relative.
  • pblakeney
    pblakeney Posts: 26,038
    edited October 2023

    pblakeney said:

    pblakeney said:

    Our problem was having austerity and heavy borrowing.

    Borrowing amounts are always relative.

    If you don't grow you'll end up borrowing more anyway.
    Done this before, haven't we? Austerity hampers growth and we were borrowing to stand still, not grow. Worst of both worlds.
    Austerity is the opposite of borrowing, right? It's all relative.
    And my point is that we we doing both. Cutting expenditure and borrowing just to afford that. We would have had to double up on borrowing to invest but what evidence is there that investment wouldn't have just gone down a hole? HS2 for example.
    The above may be fact, or fiction, I may be serious, I may be jesting.
    I am not sure. You have no chance.
    Veronese68 wrote:
    PB is the most sensible person on here.
  • It's almost like the left-wing idea that capitalism is basically at the behest of a few sharp suited chancers who are greedy enough to shipwreck the economy and the people in it, is actually something the Guardian goes after.

    Lucky for them, they have quite a lot of evidence from the 00s that that sort of did happen.

    so are you saying that the Guardian publishes headlines to support it's own agenda but if you read the article it raises the awful possibility that the magic money tree could be dieing?
    I've said it a million times - if you have a decade and a half of no growth you have serious problems.

    The longer that goes on, the fewer levers the UK govt has to pull.

    The UK has enjoyed DM status, which means investors give them the benefit of the doubt to engage in counter cyclical spending.

    If the UK continues to have no growth and do stupid things like Truss, it will no longer and it will suffer the curse of EM economies, which means that just when you need to spend the most, the cost of borrowing is the highest.
    But what if there is no link between growth and borrowing the maximum possible each year.

    If Govt’s could easily influence economic growth then they would all be doing it.
    As you know I believe the best we can hope for is a Govt that does no harm.

    If you remember I predicted that we were two more crises from hitting the economic buffers and proper austerity being forced upon us.

    I did not see debt servicing costs rising so quickly so this may count as one of those crises.

    After 15 years of laughably mild austerity and the highest peacetime tax take we are still borrowing at record levels.

    I genuinely feel that with our demographic and debt servicing costs that we have already gone past the point of no return.
    I mean, you're working on a counter factual - we have actual evidence that the American counter cyclical spending post GFC, and the Euro austerity and concern about debt (led by Germany but followed by West Europe, partly in response to the profligate southern problems) and look at the economic performance between the two.

    We can both agree the mid 00s Greek style spending lets to wrack-and-ruin, but we can also agree that cyclical spending and the obsession with debt over growth has also been really costly for Europe.
    It is not really counter factual that we spend more than we earn every year and that debt servicing is now the second biggest expenditure
  • pblakeney said:

    pblakeney said:

    Our problem was having austerity and heavy borrowing.

    Borrowing amounts are always relative.

    If you don't grow you'll end up borrowing more anyway.
    Done this before, haven't we? Austerity hampers growth and we were borrowing to stand still, not grow. Worst of both worlds.
    Austerity is the opposite of borrowing, right? It's all relative.
    No, austerity is not the opposite of borrowing.

    The opposite of borrowing is lending or in this example running a surplus and making repayments
  • It's almost like the left-wing idea that capitalism is basically at the behest of a few sharp suited chancers who are greedy enough to shipwreck the economy and the people in it, is actually something the Guardian goes after.

    Lucky for them, they have quite a lot of evidence from the 00s that that sort of did happen.

    so are you saying that the Guardian publishes headlines to support it's own agenda but if you read the article it raises the awful possibility that the magic money tree could be dieing?
    I've said it a million times - if you have a decade and a half of no growth you have serious problems.

    The longer that goes on, the fewer levers the UK govt has to pull.

    The UK has enjoyed DM status, which means investors give them the benefit of the doubt to engage in counter cyclical spending.

    If the UK continues to have no growth and do stupid things like Truss, it will no longer and it will suffer the curse of EM economies, which means that just when you need to spend the most, the cost of borrowing is the highest.
    But what if there is no link between growth and borrowing the maximum possible each year.

    If Govt’s could easily influence economic growth then they would all be doing it.
    As you know I believe the best we can hope for is a Govt that does no harm.

    If you remember I predicted that we were two more crises from hitting the economic buffers and proper austerity being forced upon us.

    I did not see debt servicing costs rising so quickly so this may count as one of those crises.

    After 15 years of laughably mild austerity and the highest peacetime tax take we are still borrowing at record levels.

    I genuinely feel that with our demographic and debt servicing costs that we have already gone past the point of no return.
    I mean, you're working on a counter factual - we have actual evidence that the American counter cyclical spending post GFC, and the Euro austerity and concern about debt (led by Germany but followed by West Europe, partly in response to the profligate southern problems) and look at the economic performance between the two.
    I'm not sure your claim about the US post-GFC really stacks up. From the post-GFC low point in GDP (Q2 2009) to Q4 2019 (before the pandemic etc. started distorting things) the US economy grew at 2.3% pa whereas the UK economy grew at 2.0% pa. Over the same period, budget deficits were (US first column)

    9.8% 10.1%
    8.6% 8.6%
    8.3% 7.2%
    6.6% 7.2%
    4.0% 5.8%
    2.8% 5.1%
    2.4% 4.1%
    3.1% 2.7%
    3.4% 2.6%
    2.8% 2.0%
    4.6% 2.4%

    So overall, the US's "counter-cyclical spending" and the UK's "austerity" gave very similar patters of deficit and GDP growth.

    Source: Google to ONS etc. Takes circa 15 mins to extract the data.

  • rick_chasey
    rick_chasey Posts: 73,203

    It's almost like the left-wing idea that capitalism is basically at the behest of a few sharp suited chancers who are greedy enough to shipwreck the economy and the people in it, is actually something the Guardian goes after.

    Lucky for them, they have quite a lot of evidence from the 00s that that sort of did happen.

    so are you saying that the Guardian publishes headlines to support it's own agenda but if you read the article it raises the awful possibility that the magic money tree could be dieing?
    I've said it a million times - if you have a decade and a half of no growth you have serious problems.

    The longer that goes on, the fewer levers the UK govt has to pull.

    The UK has enjoyed DM status, which means investors give them the benefit of the doubt to engage in counter cyclical spending.

    If the UK continues to have no growth and do stupid things like Truss, it will no longer and it will suffer the curse of EM economies, which means that just when you need to spend the most, the cost of borrowing is the highest.
    But what if there is no link between growth and borrowing the maximum possible each year.

    If Govt’s could easily influence economic growth then they would all be doing it.
    As you know I believe the best we can hope for is a Govt that does no harm.

    If you remember I predicted that we were two more crises from hitting the economic buffers and proper austerity being forced upon us.

    I did not see debt servicing costs rising so quickly so this may count as one of those crises.

    After 15 years of laughably mild austerity and the highest peacetime tax take we are still borrowing at record levels.

    I genuinely feel that with our demographic and debt servicing costs that we have already gone past the point of no return.
    I mean, you're working on a counter factual - we have actual evidence that the American counter cyclical spending post GFC, and the Euro austerity and concern about debt (led by Germany but followed by West Europe, partly in response to the profligate southern problems) and look at the economic performance between the two.
    I'm not sure your claim about the US post-GFC really stacks up. From the post-GFC low point in GDP (Q2 2009) to Q4 2019 (before the pandemic etc. started distorting things) the US economy grew at 2.3% pa whereas the UK economy grew at 2.0% pa. Over the same period, budget deficits were (US first column)

    9.8% 10.1%
    8.6% 8.6%
    8.3% 7.2%
    6.6% 7.2%
    4.0% 5.8%
    2.8% 5.1%
    2.4% 4.1%
    3.1% 2.7%
    3.4% 2.6%
    2.8% 2.0%
    4.6% 2.4%

    So overall, the US's "counter-cyclical spending" and the UK's "austerity" gave very similar patters of deficit and GDP growth.

    Source: Google to ONS etc. Takes circa 15 mins to extract the data.

    Take a look at real wages instead.

    UK economy grew 2% because its workforce was growing at 2%.
  • rick_chasey
    rick_chasey Posts: 73,203
    edited October 2023

    It's almost like the left-wing idea that capitalism is basically at the behest of a few sharp suited chancers who are greedy enough to shipwreck the economy and the people in it, is actually something the Guardian goes after.

    Lucky for them, they have quite a lot of evidence from the 00s that that sort of did happen.

    so are you saying that the Guardian publishes headlines to support it's own agenda but if you read the article it raises the awful possibility that the magic money tree could be dieing?
    I've said it a million times - if you have a decade and a half of no growth you have serious problems.

    The longer that goes on, the fewer levers the UK govt has to pull.

    The UK has enjoyed DM status, which means investors give them the benefit of the doubt to engage in counter cyclical spending.

    If the UK continues to have no growth and do stupid things like Truss, it will no longer and it will suffer the curse of EM economies, which means that just when you need to spend the most, the cost of borrowing is the highest.
    But what if there is no link between growth and borrowing the maximum possible each year.

    If Govt’s could easily influence economic growth then they would all be doing it.
    As you know I believe the best we can hope for is a Govt that does no harm.

    If you remember I predicted that we were two more crises from hitting the economic buffers and proper austerity being forced upon us.

    I did not see debt servicing costs rising so quickly so this may count as one of those crises.

    After 15 years of laughably mild austerity and the highest peacetime tax take we are still borrowing at record levels.

    I genuinely feel that with our demographic and debt servicing costs that we have already gone past the point of no return.
    I mean, you're working on a counter factual - we have actual evidence that the American counter cyclical spending post GFC, and the Euro austerity and concern about debt (led by Germany but followed by West Europe, partly in response to the profligate southern problems) and look at the economic performance between the two.
    I'm not sure your claim about the US post-GFC really stacks up. From the post-GFC low point in GDP (Q2 2009) to Q4 2019 (before the pandemic etc. started distorting things) the US economy grew at 2.3% pa whereas the UK economy grew at 2.0% pa. Over the same period, budget deficits were (US first column)

    9.8% 10.1%
    8.6% 8.6%
    8.3% 7.2%
    6.6% 7.2%
    4.0% 5.8%
    2.8% 5.1%
    2.4% 4.1%
    3.1% 2.7%
    3.4% 2.6%
    2.8% 2.0%
    4.6% 2.4%

    So overall, the US's "counter-cyclical spending" and the UK's "austerity" gave very similar patters of deficit and GDP growth.

    Source: Google to ONS etc. Takes circa 15 mins to extract the data.

    Take a look at real wages instead.

    UK economy grew 2% because its workforce was growing at 2%.
    https://www.ons.gov.uk/economy/economicoutputandproductivity/productivitymeasures/bulletins/internationalcomparisonsofproductivityfinalestimates/2020

    "output per hour growth" is what you want to be looking at. That's the stuff that actually makes people richer.



    Output per worker


    Only one of those countries did actual stimulus in 2008.

    Only one has been doing debt reduction since 2001...
  • rick_chasey
    rick_chasey Posts: 73,203
    edited October 2023
    Bluntly, the average American is richer than they were in 2007 - the average Brit/Western European citizen barely is.
  • Bluntly, the average American is richer than they were in 2007 - the average Brit/Western European citizen barely is.

    but we are taking about the size of the annual deficit and debt
  • rick_chasey
    rick_chasey Posts: 73,203

    Bluntly, the average American is richer than they were in 2007 - the average Brit/Western European citizen barely is.

    but we are taking about the size of the annual deficit and debt
    As an impacts growth, surely?

    Or are you just a German where it is a matter of principle, regardless or the rest?
  • rick_chasey
    rick_chasey Posts: 73,203
    And to be clear, the opposite of austerity is additional investment spending and *stimulus*. Not just spending more because the fixed commitments are rising in cost.
  • focuszing723
    focuszing723 Posts: 7,211
    It has to be the right stimulus though. Ideally creating business which export good/services to improve the balance of payments. Just letting the money slip into the hands of other countries is futile. Hasn't enough of that happened already via consumerism and money flowing to China?

    I don't see inflation dropping too soon with it kicking off in the Middle East.
  • It's almost like the left-wing idea that capitalism is basically at the behest of a few sharp suited chancers who are greedy enough to shipwreck the economy and the people in it, is actually something the Guardian goes after.

    Lucky for them, they have quite a lot of evidence from the 00s that that sort of did happen.

    so are you saying that the Guardian publishes headlines to support it's own agenda but if you read the article it raises the awful possibility that the magic money tree could be dieing?
    I've said it a million times - if you have a decade and a half of no growth you have serious problems.

    The longer that goes on, the fewer levers the UK govt has to pull.

    The UK has enjoyed DM status, which means investors give them the benefit of the doubt to engage in counter cyclical spending.

    If the UK continues to have no growth and do stupid things like Truss, it will no longer and it will suffer the curse of EM economies, which means that just when you need to spend the most, the cost of borrowing is the highest.
    But what if there is no link between growth and borrowing the maximum possible each year.

    If Govt’s could easily influence economic growth then they would all be doing it.
    As you know I believe the best we can hope for is a Govt that does no harm.

    If you remember I predicted that we were two more crises from hitting the economic buffers and proper austerity being forced upon us.

    I did not see debt servicing costs rising so quickly so this may count as one of those crises.

    After 15 years of laughably mild austerity and the highest peacetime tax take we are still borrowing at record levels.

    I genuinely feel that with our demographic and debt servicing costs that we have already gone past the point of no return.
    I mean, you're working on a counter factual - we have actual evidence that the American counter cyclical spending post GFC, and the Euro austerity and concern about debt (led by Germany but followed by West Europe, partly in response to the profligate southern problems) and look at the economic performance between the two.
    I'm not sure your claim about the US post-GFC really stacks up. From the post-GFC low point in GDP (Q2 2009) to Q4 2019 (before the pandemic etc. started distorting things) the US economy grew at 2.3% pa whereas the UK economy grew at 2.0% pa. Over the same period, budget deficits were (US first column)

    9.8% 10.1%
    8.6% 8.6%
    8.3% 7.2%
    6.6% 7.2%
    4.0% 5.8%
    2.8% 5.1%
    2.4% 4.1%
    3.1% 2.7%
    3.4% 2.6%
    2.8% 2.0%
    4.6% 2.4%

    So overall, the US's "counter-cyclical spending" and the UK's "austerity" gave very similar patters of deficit and GDP growth.

    Source: Google to ONS etc. Takes circa 15 mins to extract the data.

    Take a look at real wages instead.

    UK economy grew 2% because its workforce was growing at 2%.
    Well here's a thing. If you'd made a claim relating to superior US real wage growth then I'd have agreed with you, assuming my own research supported this. But your post was was about counter-cyclical spending and higher economic growth in the US since the GFC when there's no material evidence to support either of these having happened.
  • rick_chasey
    rick_chasey Posts: 73,203
    edited October 2023
    Yes, higher growth per person.

    GDP in absolute terms only matters for things like geopolitics and how big an army you can support.

    For the purposes of how rich a country is for its citizens it's all about wage growth and productivity.


    The goalposts here are all over the place.

    The main aim for any government should be *sustainable* growth in productivity; i.e. the majority of people in the country see themselves getting richer over the long run.

    The rest is all just noise.

    The gov't can affect this in 2 ways really.

    1) the rules by which the game of business is played, whether internally or dealing with other countries.

    2) the tax and spending aspect.

    They are the only levers they have.