The Great Debate UK
The news that China is engaged in talks over the building of a rival to the Panama Canal ought to set alarm bells ringing in Washington – and not just because of its obvious geopolitical implications. It is yet another sign that the Chinese have finally woken up to the fact that relending their hoard of dollars straight back to the USA is not a very smart policy, at least not as long as the Federal Government carries on spraying out greenbacks like a tipsy GI on furlough, and without Chinese support, the outlook for the Treasury bond market looks threatening.
Those who argue that it is a bad time for imposing austerity should be ignored – in the good times there was no sense of urgency, and in any case deficit reduction has to be a multiyear project. The Federal deficit is running at over 10 percent of GDP and the projections for the coming decade on unchanged policies are too frightening to contemplate.
That is the background to the Obama budget – in qualitative terms, it is very similar to the scenario faced by Britain’s new Coalition Government when it came to power last May. What lessons can America draw from the UK experience?
One caveat needs to be made at the outset. Since the mills of government grind slowly, the full impact of Britain’s austerity budget is only just beginning to be felt, so some judgements may be a little premature. However, start with Britain’s mistakes. It was a gross error to ringfence any spending items – and the choice of the National Health Service and Overseas Aid as protected species was particularly perverse, not least because it left the defence budget to sustain a sizeable cut while the country is still at war. America should nominate no sacred cows. The burden of the cuts has to fall overwhelmingly on the big spending programs: social security, Medicare and Medicaid, and defence.
–Laurence Copeland is a professor of finance at Cardiff University Business School. The opinions expressed are his own.–
If the economics profession has sunk in public estimation in the last two or three years, it would hardly be surprising. Our failure to predict the crisis is something which cannot be simply brushed aside lightly, as some of my colleagues would love to do.
-Ruth Porter is communications manager at the Institute of Economic Affairs. The opinions expressed are her own. Join Reuters for a live discussion with guests as Chancellor George Osborne makes an emergency budget statement at 12:30 p.m. British time on Tuesday, June 22, 2010.-
George Osborne has the chance to do something really radical on Tuesday in his budget statement.
By Ian Campbell
LONDON, April 13 (Reuters Breakingviews) – Gordon Brown says his Labour party will “secure the recovery” if it wins the UK election in May. The opposition Conservatives would kill the upturn, he says. Brown is right in one sense: the “recovery” can easily be broken. But only because it is so fragile in the first place.
The UK’s data looks more encouraging than it actually is. The UK needs exports and production to surge ahead. Trade figures released on April 13 might appear to herald that: February’s trade deficit was its smallest since June 2006.
– The author is a Reuters Breakingviews columnist. The opinions expressed are his own –
The UK should not waste its fiscal crisis. As Britain embarks on its election campaign, this is a perfect opportunity to engage in radical tax and spending reforms designed not just to restore the country’s fiscal balance but to boost its long-term productivity and competitiveness.
— Neil Collins is a Reuters columnist. The views expressed are his own –
National Insurance contributions make an unlikely battleground for the British election. They lack the sexiness of income tax cuts. But NI is a bad tax and the Tories are right to pledge to overturn Labour’s plan to raise it.
Unfortunately, their timing smacks of desperation as their poll lead melts away. More to the point, it flies in the face of their commitment to cut Britain’s vast budget deficit.
from Global News Journal:
So there's no question Greece has work to do to improve its bookkeeping.
Not only must it get spending in check, but it needs to be a bit more honest about where its finances stand in the first place. After all, it's not often an EU country says one month that its budget deficit is a little over three percent of GDP and admits a few weeks later that, oh dear, it's actually nearer 13 percent.
Yet it's hard not to have a little sympathy for Greece at the same time.
Its government bonds have been hammered and the price it has to pay to finance its debt has soared as financial markets have relentlessly taken it to task over the past six weeks for its profligacy.
- Jane Foley is research director at Forex.com. The opinions expressed are her own.-
The pound has started the year on a negative note. Ongoing concerns over the budget deficit, an impending general election, the prospect that the Bank of England (BoE) may yet increase quantitative easing (QE) and a drop in consumer confidence are all clouding the outlook.
Laurence Copeland is a professor of finance at Cardiff University Business School and a co-author of “Verdict on the Crash” published by the Institute of Economic Affairs. The opinions expressed are his own. -
The spirit of Britain’s Christmas is looking disconsolate this morning. Santa Claus has failed to deliver what our democracy most needed. No, not a deal to let the French have the 2012 Olympics in exchange for a bottle of Beaujolais Nouveau. Nor the nomination of Tony Blair for the Nobel Peace Prize. Number one on this year’s wish list was something more realistic, and maybe far closer: a gilt market crisis.
California Governor Arnold Schwarzenegger is pulling out all the stops with the state's "garage sale" of unclaimed or unneeded merchandise. The idea came to him via a "tweet," he's using his Hollywood cache to juice bidding and it's all in the name of belt tightening.
The LA Times has the story:
In his latest effort to balance the budget, the governor is cleaning out the state's storage sheds and holding a garage sale on Craigslist and EBay.