Nu Labour Economics

[rynnor]

The country is going bust so lets keep spending - crazy - purely done for their own short term political advantage.

BBC News - Economists back delay on government spending cuts

So much for economists - if you get 100 economists you get a hundred different opinions - its like sociology.

 

[Sparx]

Makes sense really. Stop spending then No-one spends, high street dies, more job cuts

Spend more now and once everything is stable start recouping

 

[MYstIC G]

You can't spend what you haven't got.

 

[Bugz]

In economic theory for the past 60 years govt. spending to get out of recessions has been the basic idea.

Most economic theory on paper supports it.

It helped get us out of the 1930's depression which parallels the current recession quite a bit.

It makes sense to be honest - as long as it is coupled with good monetary policy etc.

 

[dysfunction]

I agree...The economy needs more stimulus...to cut off spending now could cause more havoc...

The economists are in the majority when they say delay spending cuts.

The Tories only had the minority backing from Economists regarding cutting spending now.

I'm quite pleased we have Labour in now as the Tories would have made the situation a lot worse with their idiotic economic policy

 

[Raven]

You need income to be able to spend though. Something the government has very little of. Companies are making less profit, paying less tax, freezing wages, making staff cut backs. Less money is being spent on the high street.

They need to cut back on the crap that is not needed. How many consultants do the public sector really need? They do nothing at all except try and justify their own existence. That would save a fairly substantial amount of money.

 

[Sparx]

So imagine how worse it would be if everyone stopped spending.

 

[dysfunction]

Indeed but sometimes you have to take the burden of debt to come out the other side less worse off than you would if you stopped financial stimulus...

 

[DaGaffer]

You can't spend what you haven't got.

Fuck me, where have you been for the last 20 years? Under a rock?

Of course the answer isn't to cut or not cut; its cut and spend, but do it in the right areas; which nuLab seem incapable of doing.

 

[rynnor]

Crazy - I think a lot of you are living in denial - if you take the stimulus out of the equation we are still in recession and it will get worse again yet regardless.

We could continue to go ever further into debt handing out stimulus payments but at some point we'll have to stop and the 'recovery' will collapse like the illusion it is.

If we stop now we will reduce the overall repayments eventually.

 

[MYstIC G]

Fuck me, where have you been for the last 20 years? Under a rock?

Of course the answer isn't to cut or not cut; its cut and spend, but do it in the right areas; which nuLab seem incapable of doing.

"Seem incapable"... and you accuse me of having been under a rock?

 

[Bugz]

Rynnor without the spending, the economy would be in a much worse state.

 

[Tom]

The issue is basically that the government was spending too much even when we weren't in a recession.

Like spending all your earnings, and not buying a pension while you're earning.

 

[Bugz]

Here's an interesting fact.

Inflation 'tax' alone 'destroyed' 250 billion pounds worth of govt debt over 30 years.

 

[rynnor]

Rynnor without the spending, the economy would be in a much worse state.

No - its in a shite state its just camouflaged by artificial stimulus - its like having huge cracks in a wall and just putting some short term wallpaper over the top.

 

[rynnor]

Here's an interesting fact.

Inflation 'tax' alone 'destroyed' 250 billion pounds worth of govt debt over 30 years.

Wow thats great - lets go to 1000% inflation then all our debts will be tiny - that wont have any bad effects on the economy...

 

[Bugz]

Way to put words into my mouth.

As per usual - a target is lifted and you shoot way out of range.

If you honestly think the stimulus hasn't prevented the economy from free-falling into an even worse state, then it's silly even having a discussion with you on the stimulus as a whole.

 

[MYstIC G]

Problem is that it needs to fall, the higher you layer the bullshit the harder the fall when it comes crashing down.

 

[Bugz]

Basically in a nut-shell, here's what happens during an economic cycle:

Shit goes bad.
Shit hits the bottom.
Shit recovers.
At point x on the shit recovers, we enter the 'economy confidence' stage. Companies start investing again to build profit, replace outdated machinery, consumers are willing to spend, the risk premium drops substantially etc.

If you decrease the length between 'shit goes bad' from 'shit hits the bottom,' you make the 'shit recovers' stage come a lot quicker. A fiscal stimulus 'raises' in graphical terms the 'shit hits the bottom' stage. The fiscal stimulus is being prolonged so that the economy can move from the 'shit hits bottom' phase to the 'shit recovers' stage - most notably the point X on the 'shit recovers' stage. At this point X, hopefully (we hope!) the credit crunch will soften, capital flows will improve again and the economy can begin to rise itself out of the gutter.

 

[MYstIC G]

However if you fake where the bottom is, you cause a massive fuck up which will eventually correct itself with a massive swing. I'd rather get all the way to the bottom now rather than keep carrying on regardless untill we're the next Iceland.

 

[Bugz]

Aye and faking/not faking the bottom is a pain since it is so heavily influenced by consumer confidence & events that get blown out of their original scope.

That's why I have no clue if we hit the bottom; if we're recovering or if we're about to hit the bottom (I don't think anyone can accurately say 100%). Judging by the international coordination in fighting this rare phenomenon and the fact some countries are recovering, I'd wager we must be somewhere on the climb to recovery.

But it will only take another bank crisis to pull us back under.

I guess what I'm trying to say is - financial instability causing a recession will always give a nasty fiscal hangover but it's that stimulus that provides the best chances of recovering - until/if we discover a new way of coordinating ourselves through tough times.

 

[rynnor]

If you honestly think the stimulus hasn't prevented the economy from free-falling into an even worse state, then it's silly even having a discussion with you on the stimulus as a whole.

A 2nd crash is inevitable because we never really got the corrections to various markets that we require.

 

[Bugz]

Inevitable?

Wow - I love how certain you are of how the economy is going to turn out. We should sack all economists and employ Rynnor as chief advisor.

 

[Bugz]

Infact Rynnor can you tell me where and how you draw your conclusions? What economic history do you base your ideas on? What economic theories/ideals are you using to make your views? Show us some facts & some figures of how you are 100% sure, without a shadow of a doubt, that the economy will experience a second plunge. Let's bare in mind we have economists with years of experience divided on the credit crunch.

Please explain how you know for sure the fiscal stimulus did nothing at all? You do NOT have an alternative reality where a stimulus did not occur to compare with. So you'll need to draw on economic history again.

Either explain what you mean or carry on blubbering like a hot air balloon.

 

[Tom]

Inevitable?

Wow - I love how certain you are of how the economy is going to turn out. We should sack all economists and employ Rynnor as chief advisor.

How many of these economists now supporting the government accurately predicted the events of the last year?

 

[Bugz]

How many of these economists now supporting the government accurately predicted the events of the last year?

Not many - which further enforces my point re: the inability to be 100% sure about any event in the economy during this credit crunch.

 

[Tom]

Well if they support Gordon Brown's position they don't get my support. Gordon Brown, the man who publicly lauded the banking industry while it was generating tax revenues for his social-engineering schemes, and then turned on them when he realised that he could boost his popularity by doing so.

 

[Zenith.UK]

Bugz, it isn't economics that says there'll be another crash, it's a case of history repeating itself. Most capitalist economies subscribe to the basic ideas of Keynesian economics, almost to the point of religion. In simple language, sustained growth is good, recession is bad. The problems in the world's financial markets recently have been because the growth has been maintained by borrowing on credit. Like all credit, you have to eventually pay it back.

When a govt makes new money available, it's called "stimulus" and "quantitative easing".
When an individual does it, it's called counterfeiting.

 

[Furr]

Screw Economists! The whole field is hocus pocus, the funny thing about this is you had 20odd economists going we must do plan A, then you had 60 going no we should do this, give it a few weeks and you'll get more saying No! we should do A, B and C. They don't know shiiiiiiiiiiiiiiiit.

 

[rynnor]

Inevitable?

Wow - I love how certain you are of how the economy is going to turn out. We should sack all economists and employ Rynnor as chief advisor.

Lets take the housing market - prices grew when mortgage lenders inflated the multiples of an individual/couples income and/or accepted self certified proof of income.

Those multiples are gone now - consigned to history and not likely to return for a long time.

So how can the market be sustained when the prices require mortgage multiples that no longer exist? They cant - the markets completely artificial at the moment - people are staying put because many are now in negative equity.

It cant last - when interest rates inevitably rise your going to see repossesions go through the roof and a housing price crash.

Lets not even start on commercial property - there are tens of billions of what the bankers jocularly refer to as 'scooby' mortgages.
(referring to scuba - ie the propertys deep in negative equity but the divers still breathing ).

Banks are bending over backwards to keep these property investment companies afloat (edit- because if they go under the bank has to show them as bad debt) while they hope like hell for quick price growth to end this nightmare - we may well have to bail the banks out again if that lot goes south...