[DaveO]

Re: Austerity gone too far? : Thu May 02, 2013 2:18 pm  

Dally wrote:

Why do you say that there is zero chance of us following those countries? Our aggregate debts are higher in percentage terms than those countries. The only reason why we may not is that we have a history of sorting out messes before, via strong government. That said, this crisis is arguably our worst ever. I think I am correct in saying that no country has ever recovered from a situation as bad as ours without an effective collapse in their financial system or decades of stagnation.

The differences between us and the other countries are several.

The BofE is willing to act as a lender of last resort which mean it will buy bonds if there is a liquidity shortfall. The other countries don't have that. They have to get a bail out from the ECB which doesn't just happen and so lenders are less willing to hold the debt of these countries and if they are they charge a premium for it.

It is easier for us to service the debt as the interests payments always have been and still are low. A lot of the debt is long term (more than 10 years) so we don't have to find the cash now whereas these countries are in the exact opposite situation (a lot of Greek debt is for just 3 years or less).

Historically we have had even higher levels of national debt relative to GDP. It was something like three times GDP on the 1950's. We didn't go belly up then and so there is confidence the debt is manageable now.

We have much more flexibility than these countries in that we can do stuff like quantitative easing (print money) and devalue the currency.

Therefore the problem isn't that we are in the same boat as these other countries but that despite the advantages all the above gives us in our ability to deal with the current situation the current government has made a total pigs ear out of it.

Despite loads of quantitative easing, lower currency value and virtually no upward pressure on wages they have managed to choke off any demand that would lead to increased taxes, lower benefit bills etc by cutting so fast and deep. Osborne is basically the worst chancellor we have had since the end of the second world war.

Re: Austerity gone too far? : Thu May 02, 2013 2:26 pm  

DaveO wrote:

The differences between us and the other countries are several.

The BofE is willing to act as a lender of last resort which mean it will buy bonds if there is a liquidity shortfall. The other countries don't have that. They have to get a bail out from the ECB which doesn't just happen and so lenders are less willing to hold the debt of these countries and if they are they charge a premium for it.

It is easier for us to service the debt as the interests payments always have been and still are low. A lot of the debt is long term (more than 10 years) so we don't have to find the cash now whereas these countries are in the exact opposite situation (a lot of Greek debt is for just 3 years or less).

Historically we have had even higher levels of national debt relative to GDP. It was something like three times GDP on the 1950's. We didn't go belly up then and so there is confidence the debt is manageable now.

We have much more flexibility than these countries in that we can do stuff like quantitative easing (print money) and devalue the currency.

Therefore the problem isn't that we are in the same boat as these other countries but that despite the advantages all the above gives us in our ability to deal with the current situation the current government has made a total pigs ear out of it.

Despite loads of quantitative easing, lower currency value and virtually no upward pressure on wages they have managed to choke off any demand that would lead to increased taxes, lower benefit bills etc by cutting so fast and deep. Osborne is basically the worst chancellor we have had since the end of the second world war.

You really think Osborne alone decids such serious policy?

Re: Austerity gone too far? : Thu May 02, 2013 2:30 pm  

El Barbudo wrote:

".... it was better than Osborne's pronouncements that the Irish economy was an example to us all, a shining beacon that we should be praising and following.

But it seems that many on this thread are still extolling those policies!! After all, it has been said they were great and sustainable until something mysterious happened in "casino" banks (which is, of course, utter tripe) and we should have more borrowing to build more property and thereby grow the economy!

Re: Austerity gone too far? : Thu May 02, 2013 2:35 pm  

Dally wrote:

But it seems that many on this thread are still extolling those policies!! After all, it has been said they were great and sustainable until something mysterious happened in "casino" banks (which is, of course, utter tripe) and we should have more borrowing to build more property and thereby grow the economy!

You are falling into the "all borrowing is bad" trap.
That's like letting a burns patient freeze to death.

Re: Austerity gone too far? : Thu May 02, 2013 2:45 pm  

DaveO wrote:

The differences between us and the other countries are several... <followed by a pretty good summary of what they are>

Your patience in explaining is exemplary, would that I had that kind of forbearance.

DaveO wrote:

Osborne is basically the worst chancellor we have had since the end of the second world war.

Indeed he is.
Worse than the previously very worst.
He's often derided as not-that-bright but I think he is probably very clever, he actually knows full well what he is doing... and that is the truly worrying part of it all, he is waging class war.

[DaveO]

Re: Austerity gone too far? : Thu May 02, 2013 2:50 pm  

Dally wrote:

You really think Osborne alone decids such serious policy?

He is the chancellor and whether he does or doesn't decide policy alone he carries the can but I'd be more interested to know if you now understand why we aren't like Greece and Spain. So do you?

Re: Austerity gone too far? : Thu May 02, 2013 3:45 pm  

El Barbudo wrote:

... He's often derided as not-that-bright but I think he is probably very clever, he actually knows full well what he is doing... and that is the truly worrying part of it all, he is waging class war.

Absolutely.

The crash/recession proved an absolute gift for them. And with the bulk of the media happy, for equally ideological reasons, to help perpetuate the lies, they've had the opportunity to take a wrecking ball to all that they ideologically hate.

Re: Austerity gone too far? : Thu May 02, 2013 7:14 pm  

El Barbudo wrote:

You are falling into the "all borrowing is bad" trap.

Ni I'm not. But you do have to onsider, inter alia, your starting position when borrowing, your future earning capacity and what you'll borrow for. in the position the UK is in it's difficult to see an obvious way forward by simply borrowing.

Re: Austerity gone too far? : Thu May 02, 2013 7:31 pm  

Dally wrote:

Ni I'm not. But you do have to onsider, inter alia, your starting position when borrowing, your future earning capacity and what you'll borrow for. in the position the UK is in it's difficult to see an obvious way forward by simply borrowing.

I don't know anyone who is suggesting that the 'way forward' is only by borrowing.

Re: Austerity gone too far? : Thu May 02, 2013 7:55 pm  

Mintball wrote:

I don't know anyone who is suggesting that the 'way forward' is only by borrowing.

But what are they suggesting? It seems to be Labour soundbites from the telly. What are the proposals?