Comments on: Britain’s fiscal failure http://blogs.reuters.com/felix-salmon/2013/03/13/britains-fiscal-failure/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: TFF http://blogs.reuters.com/felix-salmon/2013/03/13/britains-fiscal-failure/comment-page-1/#comment-46262 Sat, 16 Mar 2013 18:24:29 +0000 http://blogs.reuters.com/felix-salmon/?p=20888#comment-46262 Good points, QCIC.

I think we are closer to the 30’s (perhaps 1937) than to the 90’s. Let’s hope the next decade works out better this time around…

And agree totally on “chasing growth”. If you pay people to dig holes and fill them in again, you’ve increased the GDP without any real increase in productivity. This is effectively what we were doing in both the tech bubble and mortgage bubble. We haven’t had a healthy domestic economy since the 1980s, and that shows when you look at middle-class paychecks.

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By: QCIC http://blogs.reuters.com/felix-salmon/2013/03/13/britains-fiscal-failure/comment-page-1/#comment-46253 Fri, 15 Mar 2013 15:43:49 +0000 http://blogs.reuters.com/felix-salmon/?p=20888#comment-46253 AnonymousJones-

You think we are close to the 90s in terms of situation?

The end of a decades long cold war, discontinuous technological change (the internet), and bipartisan cooperation.

You think those things are coming back? Not to mention the fact that a lot of the “growth” in the 90s was illusory. You always go chasing “growth” instead of attending to fundamentals and you get the tech bubble, and the housing bubble, et cetera.

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By: Urban_Guerilla http://blogs.reuters.com/felix-salmon/2013/03/13/britains-fiscal-failure/comment-page-1/#comment-46248 Fri, 15 Mar 2013 12:43:13 +0000 http://blogs.reuters.com/felix-salmon/?p=20888#comment-46248 UK mortgages are generally priced off LIBOR. Vendors tell you this is the Banks’ base rate, and buyers generally hear the Bank’s (i.e. Bank of England) base rate.

The big mistake here is to see the Dave/Gideot argument as an economic one. They are making a political argument, that we cannot afford the welfare state, that Britain is in the grip of a dependency culture and that ‘strivers’ need to be rewarded and ‘shirkers’ punished.

Cameron and Odbourne are talking policy as a morality play, not an economic one.

Almost everyone agrees, because they all think they are the strivers and the shirkers are someone else.

But most benefits get paid to people in work, and of those not in work, the vast majority go on pensions.

Austerity will hit the working poort the hardest. They are the real ‘strivers’.

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By: Christofurio http://blogs.reuters.com/felix-salmon/2013/03/13/britains-fiscal-failure/comment-page-1/#comment-46227 Thu, 14 Mar 2013 13:50:19 +0000 http://blogs.reuters.com/felix-salmon/?p=20888#comment-46227 Sorry, but Cameron is right. As was Morning Joe against Krugman. There isn’t a money tree. Not the Bank of England, not the Federal Reserve, not the ECB. What these can do is increase certain numbers in certain accounts, and the engravers can follow behind increasing the number of notes, but that doesn’t increase wealth in any real sense — the wealth of nations consists of their ability to produce goods and services with the resources available, and that wealth is not enhanced but threatened by this notion that there is a money tree.

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By: Christofurio http://blogs.reuters.com/felix-salmon/2013/03/13/britains-fiscal-failure/comment-page-1/#comment-46226 Thu, 14 Mar 2013 13:50:14 +0000 http://blogs.reuters.com/felix-salmon/?p=20888#comment-46226 Sorry, but Cameron is right. As was Morning Joe against Krugman. There isn’t a money tree. Not the Bank of England, not the Federal Reserve, not the ECB. What these can do is increase certain numbers in certain accounts, and the engravers can follow behind increasing the number of notes, but that doesn’t increase wealth in any real sense — the wealth of nations consists of their ability to produce goods and services with the resources available, and that wealth is not enhanced but threatened by this notion that there is a money tree.

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By: WikiChris http://blogs.reuters.com/felix-salmon/2013/03/13/britains-fiscal-failure/comment-page-1/#comment-46225 Thu, 14 Mar 2013 13:01:53 +0000 http://blogs.reuters.com/felix-salmon/?p=20888#comment-46225 Wolf used to write a lot of persuasive articles about the housing bubble etc. but although a journalist, he is also a politician and best friends with senior Labour figures such as Ed Balls. Growth definitely would close the deficit but it’s such a bad idea. A recession would kill off the parts of the economy that we need to. We’re ploughing all our efforts into things like low interest rates to prop up high asset prices. Expensive assets are never a good thing. They are great to get votes when mortgage buyers think they are all getting rich without producing real wealth with innovation and work.

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By: jststw http://blogs.reuters.com/felix-salmon/2013/03/13/britains-fiscal-failure/comment-page-1/#comment-46224 Thu, 14 Mar 2013 12:49:02 +0000 http://blogs.reuters.com/felix-salmon/?p=20888#comment-46224 So please correct me if I’m wrong, but currently mainstream economists are advocating accruing more debt now so we don’t need more debt in the future? In the hope that it will kickstart growth?

I see the point, but isn’t this just kicking the proverbial can?

Is this not an excuse for exponential growth of debt? This hardly seems like a prudent policy one way or the other.

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By: Chris08 http://blogs.reuters.com/felix-salmon/2013/03/13/britains-fiscal-failure/comment-page-1/#comment-46223 Thu, 14 Mar 2013 04:28:29 +0000 http://blogs.reuters.com/felix-salmon/?p=20888#comment-46223 The Cameron government, as Krugman has made clear, is every bit as stupid as the government of the EU whatever it is or whoever, Merkel and associates. Indeed, it would appear that Cameron has been determined to throw away the UK’s great advantage over the EU in that it has its own currency. That could have saved the UK economy if not for the austerity hysteria that has overtaken Cameron.

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By: Harpstein1 http://blogs.reuters.com/felix-salmon/2013/03/13/britains-fiscal-failure/comment-page-1/#comment-46217 Wed, 13 Mar 2013 19:58:29 +0000 http://blogs.reuters.com/felix-salmon/?p=20888#comment-46217 You’re missing the point QCIC. Belt tightening during recessions just further depresses growth. That leads to lower tax revenues and more debt because automatic stabilizers are kicking in as more and more people fall on hard times. So you can’t shrink your way to growth, unless you’re willing to cut off those stabilizers and let people starve. But of course a starving animal doesn’t just quietly wait to die, so you end up with social unrest and violence in that scenario.

Only when the private sector is growing can government shrink, and reduce it’s deficits. The UK v. US is proof of this. The UK is worse off than it was in 2009 and the US is better off.

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By: AnonymousJones http://blogs.reuters.com/felix-salmon/2013/03/13/britains-fiscal-failure/comment-page-1/#comment-46216 Wed, 13 Mar 2013 19:17:17 +0000 http://blogs.reuters.com/felix-salmon/?p=20888#comment-46216 QCIC — I seem to remember the GDP-to-debt ratio shrinking in the US counter-cyclically. But well, I guess you’re right that it must not apply because I’m so old and that was such a long, long time ago.

What was it? The 90s, I think they call it. I mean, that was, like, almost two decades ago. Life will never be like that again, surely. You have a good point – we should make people suffer now because you’re certain something that happened less than 20 years ago could never, ever happen again. I mean, the odds are clearly next-to-impossible.

[Of course, the ratio also shrunk for a sustained thirty year period after WWII, but clearly, that was a whole different century and has no bearing on what you definitively know to be case because of your infallible crystal ball]

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