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Triple dip recession on its way?

Forums New posts
*yawn*

Knew it wouldn't be long before you piped up with this one. Kudos for restraining yourself from using yet another tiresome Guardian link....
 
BarnaBlue said:
It's always nice to be proved right.:winking:
Click to expand...

One of the major problems with economics is the difficulty in applying controls; how do we know what would have happened if we had chosen another course?

That aside, if we had followed the course advocated by the like of Barna - borrow more money and spend it on anything, even digging holes and then filling them - the UK would have suffered a sovereign default, interest rates would have risen, deflation would have taken a grip, mortgage defaults would have rocketed and GDP would have been about 30% lower than it is.

It is an odd victory you claim...
 
BarnaBlue said:
Even the IMF can see that Osborne's strategy has failed.Why can't you?
Click to expand...

I do wonder sometimes how much of a post you read before deciding to reply with a link from the guardian.

The strategy has clearly failed to meet the projected forecasts. We have discussed before my thoughts on the limits of growth forecasts but let's not go over that again. I do not disagree, nor can anyone, that actual GDP performance is lower than the forecast based on the fiscal strategy.

My point is that alternative strategies may not have faired any better. You are of the opinion that borrowing more money is a risk free assured path back to trend growth. I think you are wrong.

I have always said that the pace of fiscal consolidation is about right. Osborne's plan differed by 2% originally from Darling's (did you agree with the Darling plan, Barna?). Osborne then lengthened the period such that it was less ambitious than Darling's.

Whilst I agreed with the general pace I have always disagreed with some of the actual spending decisions. I would have cut taxes (either an aggressive tax cut for the lowest paid or eliminating corporation tax entirely) to be funded through more revenue spending cuts. Some of the things that are protected (aid spending, pensioner benefits, the NHS) I would have cut.

There is no evidence to suggest that borrowing more money would work. We are at the point now where every pound borrowed adds less than 10p to GDP and the interest owed on that pound just about equals what the government recovers in taxes from the extra GDP. In other words, the extra growth just about funds the extra borrowing. That trend has been heading down for some time and will soon turn negative.

You can argue that spending has been poorly directed and I would agree. Spending on infastructure that adds capacity or improves productivity will improve medium run GDP. We've discussed this before and my position is that it is a great idea but there are no such projects. Name me a major infastructure project that could be started in 3 months? It is so difficult to develop infastructure due to the burden of regulation.

You won't have read this far, Barna. No doubt you've already produced a guardian link to the thoughts of Ed Balls, but just in case, it is always worth considering the path not taken before complaining about the one you did follow.
 
BarnaBlue said:
It's always nice to be proved right.:winking:
Click to expand...

What exactly have you been proven "right" on?

You're insinuating that the Tories being in power has caused the financial dip and that having Labour still in power we'd be in a better situation.

Why don't you go back and read what Neil had to say in his second paragraph instead of completely disregarding a completely valid argument.

Or perhaps you'd rather change the subject again.
 
How anyone can feel smug in this situation is just beyond me - I genuinely cannot get my head around it. As for being right, there is no guarantee that any other course of action would have been more or less 'successful'. All we do know for sure is that the previous lot served up a pretty nasty **** sandwich for us all, and it's no surprise that we can still taste it now and for the foreseeable future.
 
Neil's systematic and concise put-downs of Barna are a thing of beauty. If SZ really does need to fill its own budget deficit, I'd thoroughly recommend compiling them and flogging the resulting book online.
 
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